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Monday, July 22, 2024 | Back issues
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Securities Laws Applied to Fish in High Court

(CN) - The Supreme Court was in stitches today during a tortuous but lighthearted inquisition on the definition of "object" and the moral corruptness of wrongful fish disposal.

An "anti-shredding" provision of the Sarbanes-Oxley Act, enacted in the wake of the Enron scandal, was at issue.

The section prohibits altering a record or "tangible object" to obstruct an investigation, but the question that kept the judges laughing was whether the prohibition applies to fish.

John Yates, a commercial fisherman operating in the Gulf of Mexico was convicted of knowingly disposing of undersized red grouper to prevent the government from taking lawful custody and control of them. The 11th Circuit upheld his 30-day prison term and three years' supervised release, and he received certiorari from the Supreme Court this April.

Yates' counsel, John Badalamenti, focused on the ambiguity of the term "tangible object," according to a transcript published by the court.

"The natural, sensible and contextual reading is that the phrase 'record document or tangible object' is confined to records, documents and devices designed to preserve information, the very matters involved in the Enron debacle," he said.

Justice Ruth Bader Ginsburg began what would be a long, tortuous exchange. "So you think there's a difference between 'tangible object' and 'other object?'" she asked.

"Yes, there is," Badalamenti said. "The phrase 'record document and tangible objects' refers to recordkeeping. Another difference is that - a common-sense standpoint - is that records can only be maintained on tangible mediums."

The justices did not appear to find the matter so "common-sense."

Justice Sonia Sotomayor invoked the Internet, noting: "you could falsify Internet entries, or things that are in the cloud, those are intangible items."

"No, those are tangible items, Your Honor, because they are stored on a hard drive somewhere," Badalamenti said. "The cloud is not existing above."

Justice Anthony Kennedy put in: "Suppose a typewriter were used to prepare an incriminating document. The document and the typewriter were destroyed, would that be covered?"

"The typewriter would not be," Badalamenti said. "The piece of paper that the typewriter is inscribing on is a device that's designed to preserve information."

Justice Samuel Alito joined the chorus: "What about destroying a brand-new empty filing cabinet?"

"That is not a device that's used to preserve information," Badalamenti replied.

Justice Ginsburg wondered if the provision would apply to a murder knife.

"Congress didn't intend to sweep the knife into..." Badalamenti began.

Chief Justice John Roberts cut him off: "What if the knife had the defendant's name on it? Is that, destroying the knife, is that altering, destroying a record?"

"It's evidence, but it's not a - it's not a document, it's not a record or otherwise," Badalamenti said.

Justice Elena Kagan brought up a new set of problems regarding the vague difference between "other object" and "tangible object."

"To me, it seems like 'other object' is, if anything, a more classic case of that canon that I can't pronounce the name of, ejusdem whatever," Kagan said.

The court laughed, and Justice Scalia helped: "Generis."

Kagan joined the laughter. "Good," she said, "That's what I count on my colleague for."


Briefly returning to serious matters, Kagan said: "I would think that that cuts against you, that the fact that this is about any matter within the jurisdiction of any agency in the United States shows that it's really not just about corporate fraud, that Congress had a broader set of things in mind."

But the chuckling soon resumed. When asked about the possibility of his client being prosecuted under another provision, Badalamenti said this would have led him to focus on Yates' lack of corrupt intent.

Justice Sotomayor pondered: "Destroying and substituting fish is not a corrupt act."

"It would have been my defense," the beleaguered lawyer said.

"Touche," Sotomayor responded to a laughing court.

Justice Anthony Kennedy did not want to be left out.

"Suppose the fisherman took pictures of the fish, and then he destroyed both the pictures and the fish. Liability?" he asked.

"A picture?" Badalamenti wondered. "Although Congress didn't intend this in this circumstance, and we would hope the prosecutor wouldn't prosecute for this, it is a permanent account."

"The photograph isn't?" Kennedy asked.

"The photo, I'm sorry," the attorney stumbled. "The photograph is not a tangible object under our definition. If it were a digital camera and it's stored on a memory card on it, that would be a tangible object."

"Is a piece of paper a physical object?" Kennedy followed up.

"A piece of paper is a piece of paper," Badalamenti said cryptically.

Kennedy was unsatisfied. "Is it an object?"

"It's an object as well."

"But why isn't a film if it's on it - I'm talking not about a film on one of these screens, but an old-time film that you can pick up. A picture, a picture."

"Well, the film itself is a record. The film itself is a record. It's not..."

"It seems very odd that you can throw away the fish without violating the act, but you can't throw away the picture."

"This underscores everything about this case that's absurd, is that the prosecutor used this statute in this way. And had he thrown a piece of paper overboard that had the day's catch logs on it, that would have been covered, and we concede that." Later, he noted that "the American people will be walking on eggshells for if this court were to not limit the subject matter of this."

"Why is that such a crazy outcome?" Justice Sotomayor wondered.

The court then turned to critiquing the government for implying that throwing away a few fish could lead to a 20-year sentence.

"That's not what we were saying," Assistant to the Solicitor General Roman Martinez said. "I think we're not always going to prosecute every case, and obviously we're going to exercise our discretion. Mr. Yates was given an explicit instruction by a law enforcement officer to preserve evidence of his violation of Federal law. He directly disobeyed that. He then launched a convoluted cover-up scheme to cover up the fact that he had destroyed the evidence. He enlisted other people, including his crew members, in executing that scheme and in lying to the law enforcement officers about it."

The court could not help but laugh yet again, as Roberts noted: "You make him sound like a mob boss or something. I mean, he was caught..."

The court dissolved into laughter. "The fish were - how many inches short of permitted were the fish?"

"It varied fish by fish, Your Honor," said a stately Ramirez to yet more laughter.

He returned to the tangible-object problem, and for the first time all day, the judges listened without interruption for a long time.

Scalia cut him off, however, to ask whether there is "such a thing as an intangible object?"

"I'm trying to imagine one," the justice said.

"I think you could say that the object of the game of Monopoly is to win all the money, but that's not really what Congress was looking at here," Ramirez said, but more laughter ensued.

Justice Alito added: "you have arguments on all of these points, but you are really asking the court to swallow something that is pretty hard to swallow. Do you deny that this statute, as you read it, is capable of being applied to really trivial matters, and yet each of those would carry a potential penalty of 20 years?"

"What about every camper?" Justice Stephen Breyer added.

"He catches the fish and now he sees the inspector coming toward him, throws it in the lake," Alito began.

Martinez was undaunted: "That's what the statute says, Your Honor. The problem with the hypothetical is that this statute might be harsh in certain particular outlier applications. But petitioner is not arguing for some sort of de minimis rule, he's not saying that this statute can't be applied in trivial cases. He's arguing that an entire class of evidence is entirely outside the scope of the statute

The final joke of the day belonged to Kennedy: "Perhaps Congress should have called this the Sarbanes-Oxley Grouper Act." The court laughed again.

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