photo courtesy Florida Fish and Wildlife
When is a fish intangible?
This may seem like a question for philosophers – or perhaps for Dr. Seuss – but the answer ended up in the hands of the Supreme Court. In considering the case of whether a fisherman violated accounting law, the Court created plenty of fodder for journalists and commenters like me to play with headlines and jokes. Even the Court itself seemingly could not resist the allure of some aquatic rhetoric. But the actual ramifications of this case are less amusing.
As I wrote when the Court agreed to take up this case, the Sarbanes-Oxley Act, sometimes abbreviated SOX, was designed to improve corporate accounting and underline personal responsibility for executives in the wake of the accounting scandals of the early 2000s. However, in Yates v. United States, a prosecutor accused a commercial fisherman of violating Sarbanes-Oxley after he received a civil citation regarding a discrepancy between the number of undersized fish on his vessel before and after reaching port. Thus the unlikely outcome that three missing fish became the hinge upon which a major challenge to Sarbanes-Oxley turned.
In a narrowly divided decision, the Supreme Court sided with Yates, overturning an appellate decision finding that even a fish, being a “tangible object,” can be subject to Sarbanes-Oxley. In a pair of concurring opinions, the justices agreed that a fish was not the sort of object with which the law concerned itself. Yet not all the justices were ready to let Yates, the fisherman, off the hook. Four dissenters were prepared to uphold his conviction for breaking a law he could not reasonably have been expected to know anything about.
It would have been nice if the Supreme Court had struck down the law entirely, at least with respect to the destruction of “tangible objects,” a phrase so broad that ordinary citizens cannot discern when they might be violating it. We always knew this was unlikely, however, because the Court probably is not prepared to give license to the destruction of record storage devices like hard drives and USB flash drives. So basically, all we know about Sarbanes-Oxley that we did not know before Yates is that it doesn't apply to the alleged destruction of fish.
That’s too bad. To have a civil society ruled by laws, ordinary citizens must be expected to obey those laws. But citizens can only be expected to do so when the laws are clear about what they demand and when they apply. Sarbanes-Oxley fails at least the latter test. It was virtually inevitable that a prosecutor would eventually take advantage of the law’s vagueness to exact a penalty on a citizen who, in this case, could not even reasonably have been expected to know of Sarbanes-Oxley’s existence, let alone its demands. An ordinary obstruction of justice charge would have been appropriate in the circumstances. But Sarbanes-Oxley offered a potentially harsher punishment and, as I observed in my earlier post, prosecutors love leverage.
Even worse than the narrow grounds on which the court decided for Yates is the narrow majority by which his conviction was reversed. Four justices of this court evidently think it is perfectly fine to apply a white-collar fraud law to a guy trying to scratch out a living on his fishing boat, even absent any expectation that he could have been aware of the law he was charged with breaking. Do fishermen now have to attend bar association law conferences?
In her dissenting opinion, Justice Elena Kagan bemoaned the expansive application of federal criminal law to ordinary citizens’ lives but still found against Yates because, she contended, Sarbanes-Oxley is “broad but clear.” I don’t understand how the word “clear” describes any law that might apply to anything in the world that we can see, touch or smell (or cook). Maybe it’s only clear if you have Kagan’s professional resume. She might want to broaden her perspective. In any case, I don’t expect Kagan to find similar clarity in King v. Burwell, the case argued last week that might strike down a key Affordable Care Act component because the law clearly - in my view - allows federal subsidies only for health insurance purchased on exchanges established by the minority of states that have done so.
Yates’ wife wrote to us after our initial post. In her comment, she noted that the fish were frozen when measured aboard her husband’s boat, but were thawed when remeasured at the dock. If this were proven to be true, would prosecutors and Kagan contend that Sarbanes-Oxley was violated merely by allowing evidence to thaw? And, by the way, since an enforcement officer had already inspected the fish (and had the opportunity to seize any that he wanted to keep), why was it Yates’ job to preserve them for the officer in the first place? Are we all now running the evidence locker for any branch of law enforcement that cares to make an inquiry?
The outcome is decent for Yates - sorry you had to spend 30 days in jail along the way, sir - but not really for the rest of us, who may find ourselves at sea when it comes to dealing with the federal criminal code.