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Upcoming Argument in Arthur Andersen v. United States

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). Andersen’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 “corruptly persuaded” company employees “with the intent to cause them to withhold documents from, or alter documents for, an official proceeding”—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 “an unprecedented campaign of document destruction” in the months before it was served with a formal SEC subpoena for Enron-related documents.

Despite these damaging accusations, Andersen’s trial in the Southern District of Texas was not an open-and-shut affair. The defense team voiced numerous objections to the district judge’s jury instructions, specifically the definitions of the statutory terms “corruptly” and “official proceeding.” After a week of deliberations, the jury declared itself deadlocked, and the trial judge delivered an “Allen charge” 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 Andersen’s principal arguments: (1) that the jury instructions rendered the term “corruptly” 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 “particular” 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 parties’ 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 “common conduct undertaken without any consciousness of wrongdoing.” The government, in stark contrast, portrays Andersen’s response to Enron’s downfall as a unique and calculated attempt to convince its “employees to lay waste to vast troves of documents when a government investigation [was] viewed as highly probable.”

In strictly legal terms, the parties’ arguments center on section 1512(b), one of the principal weapons in the federal government’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 government’s “remarkable theory” 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 statute’s “corruptly persuades” language appears “in a list of unlawful means, not purposes.” It should thus be read “transitively” to prohibit persuasion only where a defendant “‘corrupts’ the listener by inducing her to accept a bribe or otherwise break the law,” and not where the defendant acts simply with “an improper motive.” According to Andersen, a contrary reading renders the adverb “corruptly” superfluous because the statute’s separate intent requirement mirrors the definition of “corruptly” 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 “nexus” requirement it read into the general obstruction of justice statute in United States v. Aguilar in 1995—viz., that a defendant violates the statute only if her conduct has the natural and probable effect of obstructing justice—to the 1512 context. The Court can do so, Andersen suggests, by interpreting the term “official proceeding” as requiring intent to interfere with “a particular official proceeding,” not “some possible future proceeding.” 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 “a broad range of innocent conduct . . . without fair warning.”

In an amicus brief, the National Association of Criminal Defense Lawyers (NACDL) explores one example of the “innocent conduct” Andersen fears the Fifth Circuit’s approach criminalizes: criminal defense attorneys’ zealous representation of their clients. The lower courts’ 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 Andersen’s argument point-by-point. The lower courts’ definition of “corruptly” was proper, the government asserts, because it is consistent with the “purpose-based” definition courts have applied to the same language in other obstruction of justice statutes. Andersen’s “transitive” 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 “willfully” when it seeks to override the background principle that ignorance of the law is not a defense.

The government rejects Andersen’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 Aguilar’s “nexus” 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 “need not be pending or about to be instituted at the time of the offense.”