Upcoming Argument in Arthur Andersen v. United States
on Apr 22, 2005 at 10:42 am
At the final oral argument of the October 2004 Term, the Supreme Court on Wednesday will consider whether the accounting firm of Arthur Andersen LLP was properly convicted of violating the federal witness tampering statute, 18 U.S.C. 1512(b). Andersenâ€™s indictment and eventual conviction stem from its role as the accounting firm for the Enron Corporation, whose collapse in late 2001 triggered a national scandal, increased public awareness of corporate misconduct, and led to important changes in federal corporate governance laws.
In this criminal case, the government alleged that high-ranking Andersen personnel â€œcorruptly persuadedâ€ company employees â€œwith the intent to cause them to withhold documents from, or alter documents for, an official proceedingâ€â€”namely, an investigation by the Securities and Exchange Commission (SEC). The government made these allegations against the backdrop of widely disseminated reports that Andersen had engaged in â€œan unprecedented campaign of document destructionâ€ in the months before it was served with a formal SEC subpoena for Enron-related documents.
Despite these damaging accusations, Andersenâ€™s trial in the Southern District of Texas was not an open-and-shut affair. The defense team voiced numerous objections to the district judgeâ€™s jury instructions, specifically the definitions of the statutory terms â€œcorruptlyâ€ and â€œofficial proceeding.â€ After a week of deliberations, the jury declared itself deadlocked, and the trial judge delivered an â€œAllen chargeâ€ instructing it to continue deliberating. Three days later, the jury found Andersen guilty on the single count of the indictment. After its post-trial motions for acquittal were denied, Andersen appealed.
On appeal, the Fifth Circuit affirmed the conviction. In doing so, the panel rejected Andersenâ€™s principal arguments: (1) that the jury instructions rendered the term â€œcorruptlyâ€ superfluous by defining it as the equivalent of another intent requirement already in the statute; (2) that defendants cannot violate section 1512(b) unless they have a â€œparticularâ€ official proceeding in mind when acting; and (3) that the government should have to prove that the defendant knew its conduct was wrongful.
As Marty Lederman mentioned in an earlier post, Maureen E. Mahoney of Washington, D.C. will argue the case for Petitioner Arthur Andersen LLP. The United States will be represented by Deputy Solicitor General Michael R. Dreeben.
The partiesâ€™ Supreme Court briefs rehash and expand on many of the arguments presented to the Fifth Circuit. At bottom, though, the rhetoric the parties employ tells the whole story. Andersen characterizes its conviction as an example of creative government lawyering that, if allowed to stand, will criminalize â€œcommon conduct undertaken without any consciousness of wrongdoing.â€ The government, in stark contrast, portrays Andersenâ€™s response to Enronâ€™s downfall as a unique and calculated attempt to convince its â€œemployees to lay waste to vast troves of documents when a government investigation [was] viewed as highly probable.â€
In strictly legal terms, the partiesâ€™ arguments center on section 1512(b), one of the principal weapons in the federal governmentâ€™s obstruction of justice arsenal. Andersen emphasizes that it was not charged with obstruction of justice because Supreme Court precedent has long required a pending official proceeding for such a charge. Instead, Andersen explains, its witness tampering conviction rested on the governmentâ€™s â€œremarkable theoryâ€ that, although its document retention policy was not itself unlawful, encouraging its employees to comply with that policy violated section 1512.
Andersen contends, however, that the statuteâ€™s â€œcorruptly persuadesâ€ language appears â€œin a list of unlawful means, not purposes.â€ It should thus be read â€œtransitivelyâ€ to prohibit persuasion only where a defendant â€œâ€˜corruptsâ€™ the listener by inducing her to accept a bribe or otherwise break the law,â€ and not where the defendant acts simply with â€œan improper motive.â€ According to Andersen, a contrary reading renders the adverb â€œcorruptlyâ€ superfluous because the statuteâ€™s separate intent requirement mirrors the definition of â€œcorruptlyâ€ included in the jury instructions. As such, the defendant may believe her conduct perfectly lawful and still violate the statute.
Andersen also asks the Court to extend the â€œnexusâ€ requirement it read into the general obstruction of justice statute in United States v. Aguilar in 1995â€”viz., that a defendant violates the statute only if her conduct has the natural and probable effect of obstructing justiceâ€”to the 1512 context. The Court can do so, Andersen suggests, by interpreting the term â€œofficial proceedingâ€ as requiring intent to interfere with â€œa particular official proceeding,â€ not â€œsome possible future proceeding.â€ As a last resort, Andersen relies on the rule of lenity and the doctrine of constitutional doubt, arguing that any ambiguities in the text be resolved in favor of the defendant and that the statute be construed so as to avoid criminalizing â€œa broad range of innocent conduct . . . without fair warning.â€
In an amicus brief, the National Association of Criminal Defense Lawyers (NACDL) explores one example of the â€œinnocent conductâ€ Andersen fears the Fifth Circuitâ€™s approach criminalizes: criminal defense attorneysâ€™ zealous representation of their clients. The lower courtsâ€™ reading of section 1512, NACDL insists, threatens to criminalize various methods that white collar criminal defense lawyers use to protect clients from potential liability, all of which were previously assumed to be lawful.
The government attempts to refute Andersenâ€™s argument point-by-point. The lower courtsâ€™ definition of â€œcorruptlyâ€ was proper, the government asserts, because it is consistent with the â€œpurpose-basedâ€ definition courts have applied to the same language in other obstruction of justice statutes. Andersenâ€™s â€œtransitiveâ€ reading, the government contends, would criminalize little if any conduct that is not independently proscribed by other federal statutes, like the one forbidding bribery. Furthermore, section 1512 does not require proof that the defendant knew its conduct was wrongful, since Congress uses the adverb â€œwillfullyâ€ when it seeks to override the background principle that ignorance of the law is not a defense.
The government rejects Andersenâ€™s reliance on the rule of lenity because, it maintains, the statute is not ambiguous; it finds the doctrine of constitutional doubt likewise inapposite because the statute neither presents overbreadth problems nor proscribes formerly innocent conduct without fair warning. The government also resists application of Aguilarâ€™s â€œnexusâ€ requirement to section 1512, submitting that Andersen failed to preserve many of its claims in the court of appeals and that the claims, even if preserved, contravene the express statutory language that an official proceeding â€œneed not be pending or about to be instituted at the time of the offense.â€