In its recent ruling in Yates v. United States, the U.S. Supreme Court reversed a conviction under Sarbanes-Oxley’s “anti-shredding” statute, holding that it covers documents, records and only “tangible objects” similar to them – and not, as in the case at hand, fish. The petitioner, a fisherman, faced a federal felony conviction for directing a crew member to throw undersized fish overboard after a government agent told the petitioner to preserve and segregate them until returning to port. Viewed by some as an imprudently zealous prosecution, the case fueled debate over overcriminalization (see, e.g., NACDL’s amicus curiae brief and DealBook’s article on narrowing white-collar criminal statutes) and invited prognostications on other high-profile cases under this statute, and others.
The decision is important in the white-collar criminal space, however, because it reins in an expansive statute, albeit with some questions about applicability still lingering.
Passed as part of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1519 prohibits the destruction of records, documents and tangible objects, with the intent to impede, obstruct or influence an investigation or matter within the jurisdiction of a U.S. department or agency, or in relation to or contemplation of any such matter or case. (A long list of verbs describes the prohibitory conduct in more detail: “alters, destroys, mutilates, conceals,” etc.) As we’ve warned before, the provision is powerful; within its reach is obstruction before a federal investigation has even commenced, and violation risks a 20-year prison sentence.
At issue in Yates was the definition of “tangible object”: does it include all objects or something more circumscribed? The Court voted with the latter. A plurality said the object must be one “used to record or preserve information.” Section 1519 is thus not a “general spoliation statute,” and Congress “did not intend [the term] to sweep within its reach physical objects of every kind, including things no one would describe as records, documents, or devices closely associated with them.” Examples of tangible objects under the statute would be “computers, servers, and other media on which information is stored.” Justice Alito concurred in the judgment, stating that “tangible object” must refer to “something similar to records or documents,” especially given the statute’s “filekeeping” verbs. As imprecise as that is, it at least means, as he noted, that electronic files fall within the statute.
Lower courts will have to work out what else does, which could prove nettlesome. The challenge of parsing this aspect of § 1519 was on display during oral argument, when the Justices queried petitioner’s counsel on a laundry list of potential “tangible objects” that could be covered, including: information stored in the “cloud”; tablets, laptops and other electronic devices; tangible objects not designed for storage but sometimes used that way (like a file cabinet); objects with information on them (like an identifying name); and photographs and film.
The opinion raises other questions about the statute’s scope as well. According to the dissent, § 1519 “wouldn’t normally operate” in the context of private federal court litigation because federal courts are neither agencies nor departments. The plurality, however, called this interpretation “remarkabl[e]” and said it “does not withstand examination.” Unresolved, the disagreement introduces still more uncertainty.
What is clear is that the Court pushed some conduct DOJ once charged under § 1519 out of bounds. For example, the dissent noted that a company’s altering of a cement mixer to impede an inquiry into the amputation of an employee’s fingers no longer falls within § 1519’s ambit. The plurality’s response to this criticism is, in effect: Charge something else; there are plenty of other statutes out there. Indeed, in Yates, the petitioner’s conviction under a statute prohibiting the knowing destruction of property to prevent a federal seizure still stands.
And the plurality has a good point. Even with a narrow § 1519 ruling, the federal criminal code still provides prosecutors with plenty of ammunition. Much conduct that now falls outside § 1519 after Yates could be prosecuted as obstruction of justice under 18 U.S.C. § 1505, or as conspiracy to defraud the United States by obstructing the functions of an investigating agency under 18 U.S.C. § 371. So, while Yates dealt a loss to DOJ, the immediate impact of that loss is unlikely to be widespread. Where Yates may be more impactful is over the long term, if it proves to be a harbinger of increasing judicial skepticism about overbroad criminal statutes.