Monday, November 10, 2014

Justices Fear that Sarbanes-Oxley Anti-Shredding Statute May Lend itself to Overbroad Enforcement

The U.S. Supreme Court expressed concern that the anti-shredding statute of the Sarbanes-Oxley Act may be too severe, relies too much on prosecutorial discretion, and may even be void for vagueness. The Court was hearing oral argument in a case posing the question of whether Section 1519 reached the conduct of a commercial fisherman who was convicted under this Sarbanes-Oxley anti-shredding statute for destroying undersize fish after a federal officer issued him a citation and instructed him to bring the fish back to port. Section 1519 prohibits the destruction of any record, document, or tangible object with the intent to obstruct a federal investigation. The Court had to wrestle with the issue of the statutory meaning of the phrase ``tangible object.’’ Yates v. U.S., Dkt. No. 13-7451.

Assistant Federal Defender John Badalamenti argued that the phrase tangible object is confined to records, document and devices designed to preserve information, the very matters involved in the Enron debacle. Roman Martinez, Assistant to the Solicitor General, contended that the statute’s key phrase ``any record document or tangible object’’ unambiguously encompasses all types of physical evidence.

While the fisherman got a sentence of 30 days, Justices were concerned that the maximum penalty under the statute is 20 years. Justice Antonin Scalia suggested that this was not a sensible prosecution, given that the defendant could have gotten 20 years under the statute, but in fact got 30 days.

Chief Justice John Roberts was concerned that, given the severe possible 20-year maximum sentence, and given prosecutorial discretion, the statute gives federal prosecutors extraordinary leverage to obtain plea agreements for lesser time, like one year. Mr. Martinez noted that Congress decided that a violation of the statute would carry a 20-year penalty.

Justice Samuel Alito said it is hard to swallow that the statute can be applied to really trivial matters and yet each of those would carry a potential penalty of 20 years.

Justice Elena Kagan noted that Congress gives very strict penalties to lots of minor things, that is what Congress does, said the Justice.

Mr. Martinez argued that it is not plausible that Congress used the broad term tangible object when it really wanted to refer narrowly to information storage devices. Chief Justice Roberts mentioned the Bond v. U.S. case that the Court decided last term in which the Court held that, while the text could be read broadly, Congress did not intend for the Chemical Weapons Treaty to cover a minor dusting with toxic irritating chemicals.

Justice Stephen Breyer hinted that the statute could be void for vagueness, although this issue was not addressed below. But Justice Scalia was not buying that point, noting that the statute may be incredibly expansive, but it is not vague. In an unusual move, Justice Breyer addressed Justice Scalia’s comment by noting that an otherwise clear statute could be void for vagueness if it encourages arbitrary and discriminatory enforcement. While clear, the statute can be far too broad, going well beyond what any sensible prosecutor would ever want to prosecute. Justice Breyer noted that if prosecutors can’t draw a line, there is a risk of arbitrary and discriminatory enforcement. And, if that’s a real risk, the statute falls within the vagueness doctrine.