Tuesday, May 31, 2005
Commentary on Arthur Andersen Decision
Several things are important to note here-
1. It is a 9-0 decision. Reaction - The government had it wrong and the Court thought it clear enough to speak with a single voice.
2. It only took 11 1/2 pages to write a decision that rejects two government arguments (that knowingly does modify "corruptly persuades" and a nexis requirement is required)
3. This decision sends a message that the Court is troubled with cases brought on a mere thread of criminal culpability. This is particularly important in white collar decisions as the law is complex, people have trouble understanding it, and criminal liability should only be imposed when there is a proper mens rea.
4. Document retention policies deserve some respect- the Court specifically says that they are "common in business." To say that one "impedes" the government merely because they have and use such a policy is wrong. More should be required. Likewise to say that you can be guilty of obstruction if you merely "impede" the government is absurd. The Court goes so far to use the example of "a mother who suggests to her son that he invoke his right against compelled self-incrimination." Obviously this should not be considered as obstructive conduct. Equally important to lawyers is that they be permitted to properly advise clients without fear of being accused of obstructing justice.
5. What happened here - The government chose to bring an obstruction of justice charge, usually an easy shortcut way of proceeding, as opposed to investigating and proceeding on substantive charges that might exist. Reaction - Taking shortcuts runs risks.
6. What effect will this decision have on pending cases and future cases - After the Arthur Andersen indictment, Congress amended the statute. Obviously because of ex post facto the government cannot proceed against Andersen under the new statute for the alleged conduct. Congress also added a new statute 18 U.S.C. s 1519. These amendments and the new statute were previously discussed here. Section 1512 and 1519 both have the word "knowingly" in them, so some of the findings of this Court may still apply. The Court's decision emphasizes with italics the word knowingly when it states that "Section 1512(b) punishes not just corruptly persuad[ing] another, but 'knowingly . . . corruptly persuad[ing]' another."
7. Sorry Martha, but this case may not be of much assistance in your appeal. Martha Stewart was indicted under section 1505 which has the word corruptly but does not have the modifier "knowingly." (see footnote 9 of the Court's decision that distinguishes obstruction cases brought under 1503 and 1505).
The moral of the story - the government gave a corporate death sentence here, and when you are dead there isn't much that can be done even when it is later proved that you were wrong. The truly unfortunate part here is that innocent employees suffered.