Ilya Shapiro comments [link fixed now] on the Supreme Court’s ruling this morning in Yates v. United States that the Sarbanes-Oxley accounting law’s prohibition on evasive destruction of “tangible objects” cannot be used to prosecute a fisherman who discarded undersized grouper in hopes of avoiding enforcement. “How does one make a false entry on a fish?” asked Justice Samuel Alito in a concurrence, while dissenting Justice Elena Kagan, citing Dr. Seuss’s “One Fish Two Fish,” disagreed with the prevailing justices’ view that the statute’s prohibition on destruction of “tangible objects” should be read in conjunction with references elsewhere in its text to files and information. [David Lat/Above the Law; ABA Journal] Earlier here.
The Supreme Court hears oral argument in the Yates v. U.S. case [WLF, ABA Journal, Daniel Fisher, earlier] Best line from a brief, via @ToddRuger: “More specifically, a false entry cannot be made in a fish.”
P.S. Radley Balko points out that while Congress has filled the U.S. Code with strict penalties for destruction of potentially relevant evidence, federal officials themselves almost never face real consequences when they destroy such evidence.
Steve Bainbridge has a wish list for reforms to financial and securities law in the new Congress, especially the damaging Dodd-Frank and Sarbanes-Oxley laws. Included: repeal of conflicts minerals disclosure, “say on pay,” and pay ratio disclosure; more leeway for public companies to opt out of various regulatory obligations to shareholders that their own shareholders have not contractually seen fit to impose; and litigation reform.
Meanwhile, my Cato colleague Mark Calabria points out that there “are numerous protectors of the status quo in both major political parties,” which may frustrate the relatively free-market instincts of the responsible committee chairs, Sen. Richard Shelby and Rep. Jeb Hensarling. “But at least financial regulation is unlikely to get any worse.”
In the upcoming case of Yates v. United States, the Supreme Court will decide whether a fisherman can be prosecuted under Sarbanes-Oxley’s prohibition on destroying or concealing “any record, document, or tangible object” to impede an investigation. The records, documents, or tangible objects in question were undersized fish, which Mr. Yates threw overboard instead of bringing back to the dock as instructed by inspectors. Cato has filed an amicus brief urging the Court to rule that Mr. Yates was not adequately put on notice of the reach of “tangible object” to include not just business items such as hard drives, but small marine creatures, lest the law “potentially criminalize an unfathomable range of activities.” [Trevor Burrus, earlier]
- Court will hear case of mariner charged with Sarbanes-Oxley records-destruction violation for discarding undersized fish [Jonathan Adler, Eugene Volokh, Daniel Fisher]
- SCOTUS goes 9-0 for wider patent fee shifting in Octane Fitness v. ICON and Highmark v. Allcare Health Management System Inc. [Ars Technica, ABA Journal, earlier]
- Constitutional principle that Washington must not give some states preference over others could face test in New Jersey NCAA/gambling case [Ilya Shapiro, Cato]
- Supreme Court grants certiorari in Dart Cherokee Basin Operating Co. v. Owens, a class action procedure case on CAFA removal [Donald Falk, Mayer Brown Class Defense Blog]
- “Supreme Court’s Daimler decision makes it a good year for general jurisdiction clarity” [Mark Moller, WLF, earlier] Decision calls into question “the jurisdictional basis for this country’s litigation hellholes” [Beck]
- How liberals learned to love restrictive standing doctrine [Eugene Kontorovich, more]
- “California Shouldn’t Be Able to Impose Regulations on Businesses Outside of California” [Ilya Shapiro on cert petition in Rocky Mountain Farmers Union v. Corey (fuel standards)]
Marc Hodak traces the consequences of legal dysfunction for successful start-ups hoping to unlock value for their contributing talents.
- Many of the best New Jersey sledding slopes are off limits now: “Litigators ruin pretty much everything” [Bainbridge]
- Granola bar trans-fat lawsuit leaves Russell Jackson unimpressed;
- “Criminal barbering”: license lapse gets 82-year-old Oregon hair-cutter in legal trouble [Perry]
- Tomorrow’s economy won’t thrive if municipal authorities strangle innovative businesses where they incubate [Conor Friedersdorf, City Journal]
- Need to bring property taxes under control? Try litigation reform [NJLRA]
- Convicted at height of 90s child-abuse prosecution fever, Ohio pair seek to reopen case [Briefcase] More: Balko.
- Here’s an idea: “Let the shareholders decide if SOX is worth the costs.” [Ribstein]
- Retired Massachusetts attorney found in possession of stolen art trove [five years ago on Overlawyered] Updates courtesy reader Ronald Stimbert: Legal Blog Watch 2008 (attorney convicted); Cape Cod Times 2010 (paintings returned to owner).
If enterprise IT departments and data managers thought the compliance burdens of Sarbanes-Oxley were tough, they’d better brace themselves for an even bigger wave of regulation to come, brought on as part of Washington’s reaction to the financial crisis. [Paul Rubens, ServerWatch] More: Jeff Nolan, Venture Chronicles, to whom thanks also for the kind words.
Which helps explain that dumb, self-defeating company policy on computer passwords.