Justices back fisherman in test of white-collar crime law

By Jeremy P. Jacobs | 02/25/2015 12:55 PM EST

The Supreme Court today said the government could not use a law enacted to prohibit the destruction of evidence following the Enron scandal to prosecute a commercial fisherman for throwing fish overboard.

In a 5-4 ruling, the court said a provision of the 2002 Sarbanes-Oxley Act that prohibits the destruction of a "tangible object" did not apply to fish, but only to records or other devices that preserve information.

The decision overturns the conviction of John Yates of Florida, who was prosecuted after investigators discovered undersized grouper on his boat in the Gulf of Mexico.


Justice Ruth Bader Ginsburg, writing the opinion of the court for a four-judge plurality, said applying the term "tangible object" in Sarbanes-Oxley ran afoul of the law’s intention.

"A fish is no doubt an object that is tangible; fish can be seen, caught, and handled, and a catch, as this case illustrates, is vulnerable to destruction," Ginsburg wrote. "But it would cut [Sarbanes-Oxley] loose from its financial-fraud mooring to hold that it encompasses any and all objects, whatever their size or significance, destroyed with obstructive intent."

Yates’ boat, the Miss Katie, was boarded by investigators and state regulators in August 2007. Yates and his two-man crew had more than 3,000 pounds of fish on his boat, and the investigators suspected that some of his grouper catch was smaller than the 20-inch limit.

They measured and found 72 that were undersized, and they instructed Yates, 62, to preserve the fish. The following day they returned, measured again and discovered 69 undersized grouper.

Three years later, federal prosecutors charged Yates with violating the anti-shredding provision in Sarbanes-Oxley. The white-collar law says a suspect in an investigation who "knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object" can be prosecuted under the criminal statute.

Yates was convicted and sentenced to 30 days in prison along with three years of probation.

That ruling was upheld by a federal appeals court but then grabbed the attention of the Supreme Court as a possible instance of overzealous prosecution. That line of thinking was evident at oral arguments in November, when Chief Justice John Roberts suggested the government was trying to make Yates sound "like a mob boss" (Greenwire, Nov. 5, 2014).

The case produced an unusual vote breakdown. Ginsburg’s opinion was joined by Justices Stephen Breyer and Sonia Sotomayor, who are also considered part of the court’s liberal wing, as well as Roberts. Justice Samuel Alito, a conservative, concurred with the judgment, but for other reasons.

Justice Elena Kagan, typically also considered a liberal, dissented and was joined by Justice Anthony Kennedy and conservative Justices Antonin Scalia and Clarence Thomas.

Kagan, a former solicitor general for President Obama, contended that the plain text of the law supported the government’s case.

"This case raises the question whether the term ‘tangible object’ means the same thing in [Sarbanes-Oxley] as it means in everyday language — any object capable of being touched," she wrote. "The answer should be easy: Yes. The term ‘tangible object’ is broad, but clear."

Click here for the opinion.