SOX, the Destruction of Evidence And Dr. Seuss: Is a Fish A Tangible Object?

Section 1519 was passed as part of the Sarbanes-Oxley Act in the wake of Enron’s massive accounting fraud. The section was designed to fill a gap in the law by preventing corporate document-shredding to conceal evidence of financial wrong doing. Prior law under Section 1512(b) prevented intimidating, threatening or corruptly persuading another person to shred documents. Section 1519 precludes shredding by a person. The government and the defendant in Yates v. United States, No. 13-7451 (S.C. 2015) agreed on these points. What the parties could not agree on was whether destruction of any tangible object such as a fish is covered by Section 1519.

The facts Yates are straight forward. John Yates is a commercial fisherman. While fishing in federal waters in the Gulf of Mexico on his vessel Miss Katie he caught undersized grouper. Mr. Yates got caught. By the time he made , however, there were no undersized grouper to be found on the Miss Katie. The undersized fish had been returned to the sea. After months of delay the government prosecuted Mr. Yates, claiming violations of Sections 1519 and 2232(a). The latter precludes the destruction or removal of property to prevent seizure. The former, provides in pertinent part that “Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a fake entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the proper administration of any matter within the jurisdiction of any department or agency of the United States . . .” may be fined or imprisoned for up to twenty years.

At mid-trial Mr. Yates moved for acquittal. He argued that in view of the origin, title and purpose Section 1519 focuses on document destruction. Its reference to tangible objects subsumes computer hard drives, log books and similar items but not fish, according to Mr. Yates. The Government countered, arguing that tangible objects are things other than records. The District Court rejected the motion. Mr. Yates was convicted on both charges but only appealed the one based on Section 1519. The Eleventh Circuit affirmed.

The Supreme Court reversed. A plurality opinion authored by Justice Ginsburg and joined by the Chief Justice and Justices Breyer and Sotomayor, concluded that SOX was “designed to protect investors and restore trust in financial markets following the collapse of Enron Corporation. A fish is no doubt an object that is tangible . . . But it would cut Section 1519 loose from its financial-fraud mooring to hold that it encompasses any and all objects, whatever their size or significance, destroyed with obstructive intent . . . A tangible object captured by Section 1519, we hold, just be one used to record or preserve information.” Justice Alito concurred in the result while Justices Scalia, Kennedy and Thomas joined Justice Kagan in dissent.

Justice Ginsburg began by stating that whether a “statutory term is unambiguous . . . does not turn solely on dictionary definitions of its component words.” Rather, the question is one of context because “[i]n law as in life . . .the same words, placed in different contexts, sometimes mean different things.” When “[f]amiliar interpretive guides” are applied, the meaning of the phrase “tangible object” becomes clear, the Justice wrote.

Here the caption of Section 1519 is “’Destruction, alteration, or falsification of records in Federal investigations and bankruptcy.’” This does not suggest that the section governs all physical evidence “however remote from records.” This reading is bolstered by considering the fact that Congress placed Section 1519 and its companion provision at the end of the chapter following Sections 1516 and 1517, each of which prohibits obstructive acts in specific contexts. At the same time Congress did not direct the codification of SOX’s other additions to Chapter 73 adjacent to these specialized provisions.”

The words surrounding “tangible object” in the section give further support to the reading adopted by the Court. The phrase “’falsifies, or makes a false entry in any record[or]document’ – also cabin the contextual meaning of that term” according to the opinion. Indeed, since the phrase is the last in a list of terms that starts with “record” or “document” the “term is therefore appropriately read to refer, not to any tangible object, but specifically to the subset of tangible objects involving records and documents, i.e., objects used to record or preserve information.”

Finally, the rule of “lenity” confirms the conclusion reached based on traditional cannons of construction. That principle is relevant here “where the Government urges a reading of Section 1519 that exposes individuals to 20-year prison sentences for tampering with any physical object that might have evidentiary value in any federal investigation. . .” (emphasis original). Before adopting the “harsher alternative” it is appropriate “to require that Congress should have spoken in language that is clear and definite.”

Justice Kagan, in dissent, began by noting that “[a]fish is, of course, a discrete thing that possesses physical form,” citing Dr. Seuss, One Fish Two Fish Red Fish Blue Fish (1960). “So the ordinary meaning of the term ‘tangible object’ in Section 1519, as no one here disputes, covers fish (including too-small red grouper).” At the same time, context matters as the plurality notes.

Section 1519 contains a “laundry list of verbs” which are “supposed to ensure – just as ‘tangible object” is meant to – that . . . [it] covers the whole world of evidence-tampering, in all its prodigious variety.” Indeed, Congress could only achieve its objective of preventing the destruction of evidence by avoiding overly technical legal distinctions. Accordingly, the phrase tangible object must be read broadly.