Florida commercial fishing industry, meet the Supreme Court of the United States. The Supreme Court has agreed to hear three cases from Florida in its current term, two of which involve commercial fishing.

In the most recently granted case, the state of Florida is set to do battle with the state of Georgia, in a dispute over Georgia’s consumption of water from two rivers that flow south through Georgia before converging and flowing through northwest Florida into the Gulf of Mexico. On November 3, 2014, the Supreme Court granted Florida’s motion for leave to file its complaint against Georgia, which is tantamount to the Supreme Court agreeing to hear the case. I will preview that case in my next post.  

This post focuses on a second case from Florida involving commercial fishing, Yates v. United States, which has been on the Supreme Court’s docket since late April. Oral argument has been set for today, November 5, 2014. While affecting fewer Floridians, the case has drawn participation from a host of amici curiae (literally, “friends of the court,” parties not directly involved with the case that want to weigh in to assist the Court in reaching its decision), indicating that it is seen as having the potential to have significant legal consequences.

Is Throwing Fish Overboard a Federal Crime?  

In Yates, the Supreme Court is reviewing the Eleventh Circuit’s interpretation of a federal statute that, at first blush, would seem to have nothing to do with commercial fishing. But the 11th Circuit concluded that it is fully applicable to commercial fishermen.

The statute, 18 U.S.C. section 1519, was passed in the wake of the Enron scandal, as part of the Sarbanes Oxley Act (SOX). Intended to avoid a repeat of the type of fraud perpetrated by Enron on investors and employees, SOX imposed more stringent accounting and financial reporting requirements for public companies, as well as other reforms.

Section 1519 was intended to close a loophole that allowed Enron to avoid punishment for its concerted efforts to destroy evidence and thwart investigation of its fraud. Accordingly, the statute makes it a crime to destroy or conceal “any record, document, or tangible object with the intent to impede, obstruct, or influence” a federal investigation. 

Other than federal prosecutors, few would have thought that Congress had John Yates in mind when it passed section 1519. Yates was the captain of a commercial fishing boat that was fishing for red grouper in the Gulf of Mexico in August 2007, when an FWC Officer boarded his vessel to inspect for compliance with fishing regulations. (At the time, Yates’ boat was fishing in federal waters, and the FWC officer had been deputized by the National Marine Fisheries Service.)

The FWC officer measured red grouper he suspected were shorter than 20 inches long, the minimum size then-current regulations allowed to be harvested. He found 72 undersized red grouper, issued a regulatory citation, and placed the undersized red grouper in wooden crates in the fish box on Yates’ boat, instructing Yates and his crew not to disturb them.

After returning to shore, the FWC officer measured the crated fish in the fish box, and found only 69 red grouper to be undersized, three fewer than before. He believed Yates and his crew had replaced the original fish with other fish. A member of Yates’ crew said Yates had instructed the crew to throw some undersized fish overboard.

As a result, prosecutors charged Yates with violating section 1519. Harvesting undersized fish is a civil regulatory violation, which could have subjected Yates only to paying a fine and having his fishing license suspended.

But because he had allegedly thrown undersized fish overboard, he faced criminal penalties under section 1519. He was eventually convicted and sentenced to spend 30 days in jail. Due to the conviction, he has been unable to find work as a captain.

The issue in the case before the Supreme Court is whether throwing fish overboard falls within the conduct made illegal by section 1519. More precisely, the issue is whether throwing fish overboard amounts to destroying or concealing a “tangible object” as that term is used in section 1519.

The 11th Circuit had little trouble concluding that it does. Its reasoning was simple. The Supreme Court has instructed that statutes should be interpreted according to the plain meaning of their terms. Unless the words are ambiguous, courts aren’t supposed to look to the intent behind the law. The term “tangible object” doesn’t appear to be ambiguous. And it literally means any physical object. A fish is a physical object. So the statute would seem to apply to Yates, even though Congress may not have intended it to apply to him.

There is no circuit split on the issue to resolve, which is the primary basis on which the Supreme Court generally agrees to hear cases. No other court of appeals is known to have confronted the issue whether a fish is a “tangible object” under section 1519. And the language of the statute seems clear enough.

So why would the Supreme Court take up the case? The answer may be that the case cries out for placing some limits on the doctrine of blindly applying federal criminal statutes, without any consideration of legislative intent, practical outcomes, or the appropriateness of making conduct a federal crime — at least in some circumstances.

The Supreme Court’s 2014 decision in Bond v. United States may provide a clue as to the Court’s thinking. In that case, the government invoked a statute dealing with chemical warfare to prosecute a woman who had tried to poison her former best friend, after discovering that she was pregnant with the woman’s husband’s child. Although the woman’s conduct fell under the literal meaning of the statute, the Supreme Court looked further. The statute’s wording may not have been ambiguous in itself, but Congressional overreach made it ambiguous in a sense:

[T]he ambiguity derives from the improbably broad reach of the key statutory definition given the term—“chemical weapon”—being defined; the deeply serious consequences of adopting such a boundless reading; and the lack of any apparent need to do so in light of the context from which the statute arose—a treaty about chemical warfare and terrorism. We conclude that, in this curious case, we can insist on a clear indication that Congress meant to reach purely local crimes, before interpreting the statute’s expansive language in a way that intrudes on the police power of the States.

Similar concerns about making it a federal crime to throw fish overboard may have motivated the Supreme Court to take up Yates. Most of the large contingent of amici curiae–including libertarian and pro-business groups, professors, criminal defense lawyers, and former House Financial Services Committee Chairman Michael Oxley, the Oxley in Sarbanes Oxley–urge the Court to go in a similar direction in Yates as it did in Bond. Many of the amicus briefs focus on what they call “overcriminalization” of conduct under federal law, and ask the Supreme Court to impose limits on the permissible reach of federal criminal law.

SOX seems like a good statute to use to advance that argument. It was controversial when passed, with some saying its requirements are too onerous, and it is highly disliked by Wall Street and others in the business community.   

But the question remains whether the majority of the Supreme Court will consider prosecuting a commercial fisherman under SOX a “curious” enough case to justify looking beyond the unambiguous words of the statute. If so, the bigger issue will be how the Court draws the line as to when courts may look behing the plain meaning of statutory terms when determining the scope of conduct made illegal by a federal criminal statute.    

2011 will surely go down as the Year of the Class Action in the Supreme Court of the United States.  If you were surprised at the potential effects of Concepcion v. AT&T Mobility LLC for consumer class actions (unlike many observers, I didn’t see it as their end), then you might want to sit down before reading the Court’s decision in Walmart v. Dukes — which has far greater implications for employment discrimination class actions.

In my first entry on this blog back in April, I wondered where the Court was going with Dukes.  Was it looking to address when (if ever) the easier-to-satisfy Rule 23(b)(2) can be used to certify a class seeking monetary relief?  Plaintiffs’ burden of proof in showing that a class satisfies the requirements of Rule 23?  Or was the Court bothered by an issue specific to Title VII class actions only — the theory that allowing “excessive subjectivity” in hiring decisions can be a “pattern or practice” that may be actionable in an employment discrimination suit if the plaintiffs show a disparate impact on women?

And correspondingly, would the decision’s effects extend to: (a) only civil right cases; (b) all (b)(2) classes; or (c) all class actions?  While many think the answer is all of the above, I think the decision is for the most part confined to (a) and (b).

The Basics of the Decision

The thrust of the Dukes decision can be gleaned from this comment by J. Russell Jackson (who makes his living defending corporations against class actions) on his blog Consumer Class Actions and Mass Torts: “”it’s like an 8-year-old’s Christmas morning in my office!”

Lawyers on the plaintiffs’ side, on the other hand, must feel like they found coal in their stockings, despite what they told the National Law Journal when it called for their reactions.

A description of the background, facts, and procedural hisory of the case can be found in my earlier post, so I’ll focus on the holding.

The Court was unanimous in rejecting the court of appeals’ conclusion that Rule 23(b)(2) certification was appropriate.  The Court also addressed Rule 23(a), with a 5-4 majority rejecting the 9th Circuit’s finding that the class members shared “common issues of law or fact” satisfying Rule 23(a)(2)’s “commonality” requirement.

Either holding would have been sufficient to reverse the decision on appeal, and appellate courts generally try to confine their analyses to what is necessary to decide the case before the court, so it’s somewhat surprising that the Court addressed both points.  Perhaps it did so to ensure that the case wouldn’t wind up back before the Court if the plaintiffs tried another route to certification on remand.  Then again, the Court may have simply felt that since the issues were already teed up, it would be more efficient to decide them now than to wait for them to be brought up again in some future case.

Defense lawyer Jackson goes on to say that the Court fulfilled 5 of the 8 wishes on his wishlist.  I personally think he overstates it a bit.  At least 2 of his wishes — that courts must perform a rigorous analysis at class certification, and can’t use Rule 23 to abridge substantive rights — had been granted by the Court long ago.  And the courts of appeals had already unanimously endorsed another of his wishes: that courts must decide merits issues where necessary to the Rule 23 analysis.

That said, it’s hard to argue with the notion that Dukes embraces many positions advanced by class action defense lawyers.  And I think the decision has the potential to all but eliminate private enforcement class actions under Title VII, as well as the use of Rule 23(b)(2) in cases involving monetary claims (i.e., it will not be used in most cases brought by for-profit law firms).

What About Other Types of Class Actions?

The impact on class actions that don’t involve civil rights is not as clear to me.  Many commentators are saying that the Court’s description of commonality will impact all class actions.  But I’m not so sure.

Cases Like Dukes Are Highly Individualized

One thing to remember when reading appellate decisions is this:  context always matters.  And that is particularly true in Dukes.  As in many Title VII class actions, Dukes is an effort to try very individualized legal claims through representative plaintiffs.  In the absence of an explicit written policy to discriminate or a test designed to achieve the same goal, decisions to hire or promote an employee are extremely individualized.  They’re based not only on an applicant’s qualifications and performance, but also on the qualifications and performance of competing applicants.

So proving that a particular hiring or promotion decision was unlawful is often inseparable from the individual circumstances of that decision.  The “excessive subjectivity” theory was an attempt to get around that problem through statistics.  But statistics in such a case may tell you something about the employer’s overall hiring, but they still can’t say with certainty whether any particular person was adversely impacted.

I’ve always felt that plaintiffs in Title VII cases were held to a lesser standard than in other class actions.  That was likely attributable to the the historical bond between class actions and civil rights actions — Brown v. Board of Education is probably the most famous class action to this day — as well as the understanding that Rule 23’s drafters had civil rights class actions in mind.

After Dukes, forget the Advisory Committee Notes to Rule 23(b).  They may say that provision is meant to apply to “various actions in the civil-rights field where a party is charged with discriminating unlawfully against a class…”  But the text of the rule specifically refers to cases involving “declaratory or injunctive relief.”

So courts’ traditional understanding that Rule 23(b) also encompassed other forms of “equitable relief” in civil rights cases (i.e., backpay) even though monetary in nature, was misgurided, according to the Court.  But in a nod to Brown, perhaps, the Court clarified that when the Advisory Committee notes speak of civil rights cases, they are referring to desegregation cases and the like, where only non-monetary relief is at issue.

So I think one major lesson of Dukes is that civil rights cases are to be treated the same as any other class action.

The Court’s Rule 23(a)(2) Analysis Is Not A Major Change

Which brings us back to the principle that context always matters.  In my view, the Court’s discussion of commonality is inseparable from its rejection of the “excessive subjectivity” theory.  And the Court’s finding that the class didn’t satisfy commonality loses much of its significance when removed from that context.

So I don’t think that the Court’s analysis of the requirement of commonality under Rule 23(a)(2) will have quite the impact on other types of cases that many are predicting.  In fact, I don’t think the Court really changed the standard that generally applies in determining whether the class members share common issues of law or fact.  To satisfy commonality, the Court said:

[The class members’] claims must depend upon a common contention…That common contention, moreover, must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.

What’s new about that?  In the types of cases that I’ve always understood to be good candidates for class action treatment, which is to say where the substantive claims are defendant-centered, that commonality standard would appear to be satisfied.

Take, for example, a price-fixing case.  A “common contention” that is “central to the validity of each one of the claims” is the existence of a price-fixing scheme among the defendants.  And if one plaintiff proves that such a scheme existed, it generally will have resolved that contention class-wide, “in one stroke.”

The same is true in a 10b-5 securities case.  When a plaintiff resolves the central issue of whether the defendants made false or misleading statements, that issue is resolved class-wide.  So too in an Enron-style ERISA cases alleging imprudent investment in an employer’s stock.  When a plaintiff resolves the central contention that it was imprudent for plan managers to invest plan assets in the investment vehicle at issue, the validity of that contention is established class-wide, “in a single stroke.”

              The Court’s Rule 23(b)(2) Holding is Significant, But Mostly for Title VII Cases

There’s no denying that the Court severely restricted the use of the Rule 23(b)(2) accross the board.  The Court nominally left open the possibility that (b)(2) might be used where monetary relief is “incidental to requested injunctive or declaratory relief” and “damages…flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief,” as the 5th Circuit held in Allison v. Citgo Petroleum Corp.

But at the same time, the court strongly implied that allowing a non-opt-out class to pursue monetary relief violates due process.  So I wouldn’t expect to see any such classes certified anytime soon.  Nor are many plaintiffs likely to request it, as the Court made it as difficult to certify a (b)(2) class as a (b)(3) class, in concluding that (b)(2) applies only when “predominance and superiority are self-evident.”

Yet, again, this holding would seem to primarily impact class actions brought under Title VII and other civil rights statutes.  Plaintiffs in most other cases seek monetary relief and certification under Rule 23(b)(3).  Courts, after all, have rarely found that injunctive and declaratory relief predominated in a case where plaintiffs also sought monetary relief.  Outside of the civil rights context, at least.