SUPREME COURT RULES THAT DESTRUCTION OF FISH DOES NOT VIOLATE SARBANES-OXLEY ACT

By TONI ELLINGTON

On February 25, 2015, the U.S. Supreme Court issued a ruling in Yates v. U.S., No. 13-7451, the case involving the appeal of a criminal conviction of a commercial fisherman for destruction of evidence, in this case undersized fish.  According to the Supreme Court, the Sarbanes-Oxley Act does not apply to destruction of all objects in the physical world – in this case, fish.

This case, previously reported in this blog, is an appeal from the decision of the Eleventh Circuit Court of Appeals which upheld the conviction of the Florida fisherman, John Yates, under the “anti-shredding” provision of the 2002 Sarbanes-Oxley Act, 18 U.S.C. §1519.  Sarbanes-Oxley was passed to protect investors against fraudulent corporate disclosures following the Enron document destruction scandal.  The anti-shredding provision makes it a crime to destroy, mutilate, conceal or cover up any record, document, or tangible object with intent to impede, obstruct, or influence an investigation within the jurisdiction of any department or agency of the United States.

John Yates allegedly had 72 red grouper fish which were under the legal size limit when the Florida Fish and Wildlife Conservation Commission boarded his vessel in the Gulf of Mexico in 2007.  When he reached shore, the Commission only found 69 undersized fish out of the 3,000 fish in Yates’ catch.  A jury convicted Yates of destroying evidence, and the Eleventh Circuit upheld the conviction.  Yates served 30 days in jail, even though a conviction under Sarbanes-Oxley carries a maximum penalty of 20 years.

Oral argument in the case centered on the Congressional intent regarding items covered by §1519 and whether Congress intended to include tangible objects.  Writing for the 5-4 majority, Justice Ruth Bader Ginsburg said that while Sarbanes-Oxley covered tangible objects, its provisions against destruction applied only to objects one can use to record or preserve information.  Justice Ginsburg noted that the law covered “falsifying” any tangible object.  As she explained, “Fish, one may fry.  But may one falsify, or make a false entry in, the sea-dwelling creatures?”  Justice Ginsburg’s opinion was joined by Chief Justice John G. Roberts, Jr., Justice Stephen G. Breyer, and Justice Sonia Sotomayor.  Justice Samuel A. Alito, Jr. joined in the result but wrote a separate opinion.  Justice Elena Kagan wrote a dissenting opinion, which was joined by Justices Antonin Scalia, Anthony Kennedy, and Clarence Thomas.

The full Supreme Court opinion is available at www.supremecourt.gov/opinions/opinions.aspx.  For more information, contact Toni Ellington at (504) 599-8500.