GlobalTort

GlobalTort

The Intersection Among Torts, Science, Corporate Law, Insurance & Bankruptcy

Health Insurer Failures in Explaining 2015 Plans – A Mass Mailing Of Incorrect Information – A New Example from Blue Cross Blue Shield of Illinois

Posted in Insurance

Blue Cross Blue Shield of Illinois continues to fail spectacularly.  The latest example is from a BCBS email dated December 13, 2014. It arrived in my email inbox over the weekend.

One has to ask and wonder what – if any – quality control procedures are used by the various BCBS companies. The text of BCBS’ email is pasted below. Bolded and underlined phrases are BCBS’s admissions of a massive error.

______________________________________________________________

December 13, 2014

 We recently sent you a Summary of Benefits and Coverage (SBC) meant to show what your current

plan will cover in 2015.  We’ve found that this SBC instead shows your 2014 benefits. Enclosed is your

plan’s SBC for 2015.

If you made a plan change for 2015 before Dec. 5, you will also receive an updated 2015 SBC for that

new plan.

Your next steps:

Use this new SBC in place of the one sent earlier

• Review the enclosed SBC, as benefit details may be different

• Remember to refer to the Renewal Letter we sent you before open enrollment to see how your

plan is changing for 2015

We are sorry for any confusion this may have caused. If you have any questions, you can call one of

our Customer Advocates toll free at 1-800-538-8833. You can also log into Blue Access for MembersSM

at bcbsil.com, for more details on your account.

As always, your satisfaction is our top priority.

Sincerely,

Blue Cross and Blue Shield of Illinois

Be Careful What You Wish For – The Latest Asbestos Example

Posted in Asbestos, Litigation Industry, Mass Tort Issues, Policy Issues

Be careful what you wish for remains an important maxim for lawyers, lobbyists and risk managers.  The latest example arises as it appears the plaintiff’s bar in Illinois out hustled the defense lobbying groups, and achieved a repeal of the 10 year Illinois statute of repose for “premises” claims.  The state legislative record is available online at this page.   How was the statute taken down? It all seems to relate back to a defense friendly ruling sought and achieved last year at SCOTUS on statutes of repose for premises liability claims arising from “toxins” (loosely speaking) As to the actions in Illinois, the U.S. Chamber of Commerce is very unhappy, and complaining bitterly through “news publications” publications it fosters, but the “news articles” do not include the back story.

The back story goes to recent wrangling at SCOTUS about federal preemption of state statutes of repose in the context of CERCLA.  The federal CERCLA statute includes a term that tolls some statutes of limitation. Defense side interests asked for a ruling that it does NOT toll state statutes of repose. The case ended up at SCOTUS, with amicus briefs filed by DRI and other defense side interests (see this page of SCOTUS blog for all the key links).   SCOTUS ruled last summer. The ruling was adverse for plaintiffs in some settings because it refused to allow tolling of state law statutes of repose. The ruling is well explained by Robert Percival at SCOTUS blog. See here for the full explanation; the introduction is pasted below:

“Yesterday in CTS Corp. v. Waldburger, the Court ruled – by a vote of seven to two –that the provision of the federal Superfund law (the Comprehensive Environmental Response, Compensation and Liability Act, or CERCLA) that tolls state statutes of limitations until after victims of toxic exposure have discovered their harm, 42 U.S.C. § 9658, does not apply to state statutes of repose.  Statutes of repose set deadlines on the filing of litigation that do not turn on when harm is first discovered.  The decision rested on the majority’s interpretation of the statutory language of CERCLA, which refers only to “statutes of limitations” and not “statutes of repose.”  Even though two of the Justices in the majority admitted at oral argument that they were not aware until recently of any distinction between the two, the majority concluded that Congress had been aware of the distinction when it amended CERCLA in 1986.  Justice Ginsburg and Justice Breyer dissented, finding that Congress had implicitly preempted statutes of repose because they interfere with the congressional purpose of preserving legal recourse for victims of toxic exposures that cause harm with long latency periods.

The decision reverses a Fourth Circuit judgment that had reinstated a lawsuit by a group of North Carolina homeowners who discovered that their well water was contaminated by toxic chemicals decades after an industrial facility owned by CTS Corporation had ceased operations. Because North Carolina has a statute of repose that bars lawsuits from being filed more than ten years after the defendant’s last action, the trial court had dismissed the lawsuit.  As a result of the Supreme Court’s decision, the homeowners’ lawsuit once again will be dismissed.

_______________________

So, that was the dynamic as of summer 2014. With that ruling in mind, the focus returns to state law.  There, the basic story is that the Illinois construction statute of repose is one of many sought and obtained over the years by defense interests. See generally this 2013 DRI summary article from Ed Slaughter and others.

Now  return the focus to the recent events in Illinois in particular. A November 26, 2014 blog post by Alexander Bandza picks up the story:

_________________________________________

“By Alexander J. Bandza

Under 735 ILCS 5/13-214, Illinois provides for a ten-year statute of repose for any actions in “tort, contract or otherwise” on defects in construction of improvements to real property.  Specifically, subsection (b) provides that:

No action based upon tort, contract or otherwise may be brought against any person for an act or omission of such person in the design, planning, supervision, observation or management of construction, or construction of an improvement to real property after 10 years have elapsed from the time of such act or omission.

State Rep. Nekritz has introduced SB 2221, which would strip the protections afforded by section 5/13-214 for actions “resulting from the discharge into the environment of any pollutant.”  Specifically, the bill adds a new subsection (f), which provides that:

(f) Subsection (b) does not apply to an action that is based on personal injury, disability, disease, or death resulting from the discharge into the environment of any pollutant, including any waste, hazardous substance, irritant, or contaminant (including, but not limited to, smoke, vapor, soot, fumes, acids, alkalis, asbestos, toxic or corrosive chemicals, radioactive waste, or mine tailings).

While speculating on the Legislature’s intent is always risky business, this proposed bill may have been conceived in the wake of the U.S. Supreme Court’s decision in CTS Corporation v. Waldburger, 134 S. Ct. 2175 (2014), which held that CERCLA § 9658 does not preempt states’ statutes of repose.  As Illinois courts have long recognized, the construction statute of repose was enacted for the express purpose of insulating all participants in the construction process from the onerous task of defending against stale claims.  SB 2221’s broad and unqualified language could have the drastic effect of stripping the protections afforded by section 5/13-214 whenever any “discharge into the environment of any pollutant” was involved.

SB 2221 is available here.”

___________________

Against that  background, the plaintiff’s bar appears to have achieved repeal of Illinois’ 10 year statute of repose. More specifically, repealing legislation has passed in Illinois, and awaits a signature by lame duck Governor Quinn, as explained in articles from fronting organizations for the Chamber of Commerce. Presumably Governor Quinn will sign the legislation.

“Be careful what ……

New Study on Drywall and Asbestos, and New Spin

Posted in Asbestos, Science

Today, knowledge of new information can spread quickly, if – repeat, if –  procedures are in place to capture the information. Here’s an example from asbestos.

On November 26, 2014, a new study on asbestos fibers and drywalling went online at the Society for Risk Analysis. It is:  Boelter et al, Comparative Risks of Cancer from Drywall Finishing Based on Stochastic Modeling of Cumulative Exposures to Respirable Dusts and Chrysotile Asbestos Fibers, Risk Anal. 2014 Nov 26. doi: 10.1111/risa.12297. [Epub ahead of print]. Meanwhile, on November 28, 2014, Surviving Mesothelioma ran an article reporting on and spinning the new study.

_________________________________________________________________________________________________

The abstract states:

Abstract
Sanding joint compounds is a dusty activity and exposures are not well characterized. Until the mid 1970s, asbestos-containing joint compounds were used by some people such that sanding could emit dust and asbestos fibers. We estimated the distribution of 8-h TWA concentrations and cumulative exposures to respirable dusts and chrysotile asbestos fibers for four worker groups: (1) drywall specialists, (2) generalists, (3) tradespersons who are bystanders to drywall finishing, and (4) do-it-yourselfers (DIYers). Data collected through a survey of experienced contractors, direct field observations, and literature were used to develop prototypical exposure scenarios for each worker group. To these exposure scenarios, we applied a previously developed semi-empirical mathematical model that predicts area as well as personal breathing zone respirable dust concentrations. An empirical factor was used to estimate chrysotile fiber concentrations from respirable dust concentrations. On a task basis, we found mean 8-h TWA concentrations of respirable dust and chrysotile fibers are numerically highest for specialists, followed by generalists, DIYers, and bystander tradespersons; these concentrations are estimated to be in excess of the respective current but not historical Threshold Limit Values. Due to differences in frequency of activities, annual cumulative exposures are highest for specialists, followed by generalists, bystander tradespersons, and DIYers. Cumulative exposure estimates for chrysotile fibers from drywall finishing are expected to result in few, if any, mesothelioma or excess lung cancer deaths according to recently published risk assessments. Given the dustiness of drywall finishing, we recommend diligence in the use of readily available source controls.
© 2014 Society for Risk Analysis.

 

A Potential Blockbuster – California Supreme Court to Review Constitutionality of Caps on Medical Malpractice Damages

Posted in Medical Malpractice

A potential new blockbuster case is now in the works because the California Supreme Court agreed to review the constitutionality of financial caps on damages in medical malpractice cases. The story is noted in a November 26, 2014 story at Insurancenewsnet.  The story is mainly a restatement of a press release from a plaintiff’s advocacy group, and includes a link to the group’s amicus letter urging review by the court.

My much less than fully informed guess is that the court strikes down the caps. That’s my view because 1) the last few years have included multiple state supreme court decisions knocking out caps, as well 2)the issuance of as numerous studies indicating medical malpractice continues to kill or mains many people every year, and 3) numerous studies indicating that the caps do not in fact achieve their stated mission of reducing medical malpractice premiums. Indeed, the latter is  hardly a compelling rationale when viewed from the perspective of the person killed or maimed.  One can instead reasonably say that caps rules are unconstitutional takings of the property rights (tort claim rights) of the victims, and that caps are wealth redistribution efforts that target persons the least able to protect against the problem.  Moreover, today we live increasingly in an age of  precision and variables, as opposed to blanket rules based on the premise that one sized fits all. A $250,000 cap may may sense for injuries almost certain to heal, and few hassles. The situation, however, is quite different for a person who loses a limb. And the situation is even more extreme for  a person who suffers global paralysis, or other awful injuries. One also would expect plaintiff’s to point out that a recent study suggested that damages caps reduce hospital safety.

On the defense side of the coin, I’ve never seen a data driven, peer reviewed article proving that damages caps reduce insurance premiums over time. But I do not work in the area, and so perhaps I’ve missed data-driven articles that are persuasive for defendants. I’ve seen a a couple of articles saying that fewer medical malpractice cases were filed, but that’s about it, going by memory.

One certainty is that the case will generate a frenzy of amicus briefs, news articles, spin stories and media sound bites. Lawyers, insurers, professional medical associations and consultants will have a field day. New papers are probably being written at this very moment.

Of greater note, the arguments and opinion should highlight the reality that its been 30 years since the “tort litigation crisis” was proclaimed.  With so many years of experience now in the past, data exists and one can look to see the impacts of various pieces of “tort reform” legislation. The data of course will be not be perfect, and there are many variables. But, in a world increasingly full of data, one suspects the better data will be persuasive. Indeed, one might ask if Daubert standards should be applied to bar legal arguments based on hypothesized breaches of imagined floodgates,  as opposed to actual facts and history studied through a reliable process.

It will be interesting to see if the defense side can present compelling, peer reviewed data to support its arguments.  This may be a moment at which defense interests will regret taking extreme positions and limiting non-economic damages to a relative pittance ($250,000, in this instance), with no increases, ever.  “Be careful what ……” 

Also relevant is the principle that no one is an island, in tort litigation. A defense loss and a sweeping opinion could have ripple effects across other ponds.

Kudos to Crain’s Chicago Business – Lumps of Coal to the Wall Street Journal

Posted in Offtopic

Some (many) businesses make changes to online systems, and produce all kinds of problems for customers. But instead of being upfront, they stonewall their customers, leading to both failed service and wasted time. A recent example of this arises from my online subscription to the Wall Street Journal. After years of working very well, suddenly my password is rejected on a random day to day basis, with the latest denial occurring on Tuesday, December 25.  The Journal’s “online chat help” staff  proclaims nothing changed, but that cannot possibly be true – machines do not include gremlins as components. Therefore, lumps of coal should grace the offices and/or kiosks of the decision makers at the Journal.

In contrast, Crain’s Chicago Business did the right thing. It made changes to its systems and warned its customers with an email in advance of putting the changes into action, as shown below.  In a perfect world, Crain’s would ensure a seamless change, but at least it’s owning up to change, in advance.  Kudos to Crain’s for at least making that effort.  It is sad and telling that the most service providers today are so very sloppy that Crain’s actions are noteworthy.

 

We are always looking for ways to deliver the news you want when you expect it. To that end, we are upgrading our technology and this means that our email address is changing. Since you’ve signed up to receive email newsletters or other correspondence from us, we want to make sure you continue to get those messages after the switch, which will take place next week. Please let us know if you suddenly stop receiving emails from us so we can work to get any issues fixed as quickly as possible to make sure you don’t miss a bit of valuable information.To better ensure you continue receiving email from Crain’s Chicago Business, please add our email address to your contacts list or follow these simple instructions.If you have any questions or concerns, please email us at customerservice@XXXXXXX.com [Xs inserted by blogger to protect Crain's].  Thank you.
David Snyder
Publisher

“Unsealed Garlock documents could be ‘double-edged sword’”

Posted in Asbestos, Asbestos Bankruptcy, Asbestos Trusts

There are many double-edged swords in mass tort litigation. Some people see them, and some do not, too often because of a propensity for consuming kool-aid as instructed by others. Sometimes the double-edged swords are mentioned in public, and other times, not so much. It’s refreshing to read David Christian’s comments on double-edged swords in Garlock, as reported in a November  20, 2014, article in Legal Newsline.

Exponential Change: “U.S. to Build Two Flagship Supercomputers for National Labs Expected to Be 3X Faster Than Current Top Supercomputer”

Posted in Litigation Industry, Science

Exponential change continues to arrive in computing, and even more will arrive in 2017. For an example, consider the facts set out in last week’s press release from Nvidia, a maker of GPUs that are key parts of faster super-computing. The bottom line is the announcement of 2017 delivery and installation of supercomputers 3x faster than today’s crazy fast machines. Not 30% faster, but rather 3x! Exponential change is hard for humans to grasp, but it’s very helpful to appreciate the scale and pace of change. Consider Ray Kurzweil’s writing  back in 2003:

“We’re entering an age of acceleration. The models underlying society at every level, which are largely based on a linear model of change, are going to have to be redefined. Because of the explosive power of exponential growth, the 21st century will be equivalent to 20,000 years of progress at today’s rate of progress; organizations have to be able to redefine themselves at a faster and faster pace.” 

_________________________________________________________________________________________

SANTA CLARA, CA–(Marketwired – Nov 14, 2014) – The U.S. Department of Energy today unveiled plans to build two GPU-accelerated supercomputers — expected to deliver at least three-times greater performance than today’s most powerful system — which will move the world closer to the long-held goal of exascale computing.

The supercomputers, to be installed in 2017, will be based on next-generation IBM POWER servers with NVIDIA® Tesla® GPU accelerators and NVIDIA NVLink™ high-speed GPU interconnect technology.

The “Summit” system at Oak Ridge National Laboratory will be capable of delivering 150 to 300 peak petaflops, and be used for open science. Delivering performance well in excess of 100 peak petaflops, the “Sierra” system will be a key element of Lawrence Livermore National Laboratory’s national nuclear security mission.

They will be considerably faster than the U.S.’s current speed champ, Oak Ridge’s “Titan,” which delivers 27 peak petaflops, as well as the world’s fastest, Tianhe-2 at China’s National Super Computer Center, in Guangzhou, which delivers 55 peak petaflops.

Visit the NVIDIA website for more information and a video about these new systems.

“Today’s science is tomorrow’s technology,” said Jen-Hsun Huang, CEO and co-founder of NVIDIA. “Scientists are tackling massive challenges from quantum to global to galactic scales. Their work relies on increasingly more powerful supercomputers. Through the invention of GPU acceleration, we have paved the path to exascale supercomputing — giving scientists a tool for unimaginable discoveries.”

The U.S. is investing in Summit and Sierra to achieve breakthroughs that lead to greater U.S. energy independence, new approaches to curbing climate change, dramatic improvements in fuel efficiency, natural disaster prediction, safer nuclear material storage, economic competitiveness, and more.

The systems represent the first major milestone in the ongoing partnership between IBM and NVIDIA. They build upon the work of the OpenPOWER Foundation, an open development community formed to develop next-generation computing solutions for high performance computing and enterprise data center customers.

Related Quotes
NVDA
20.48
+0.69%
NVIDIA Corporation Watchlist
20.48+0.14(0.69%)
NasdaqGS9:48AM EST

Intel Unveils Third Generation Xeon Phi Chip Knights Hill Zacks 20 hrs ago
Nvidia Discloses Patent Lawsuit From Samsung The Wall Street Journal q 2 days 1 hr ago
More
New Technologies Hasten Exascale Computing
The supercomputing community has for many years worked toward building exascale systems, which can perform a quintillion — a billion billion or 1018 — floating point calculations per second, known as FLOPS. A FLOP is equivalent to a single mathematical calculation, like multiplying two numbers together.

Summit and Sierra will be the next major step on the path to reaching exascale computing levels by virtue of a number of breakthrough technologies.

One is the NVIDIA NVLink high-speed GPU interconnect, which will be integrated into NVIDIA GPUs and IBM POWER CPUs powering the new systems. NVLink allows GPUs and CPUs to share data five to 12 times faster than today, and is designed to ultimately enable supercomputers that are 50 to 100 times faster than today’s fastest systems.

The systems will also feature NVIDIA’s future generation GPU architecture, Volta™, which will deliver considerably higher performance than the company’s current Maxwell™ architecture and subsequent Pascal™ design. Delivering significantly higher levels of computational performance than anything available today, NVIDIA GPUs will provide Summit and Sierra with more than 90 percent of the peak floating point processing capability.

“Our users have the most complex scientific problems and need exceptionally powerful computers to meet national goals,” said Buddy Bland, project director of the Oak Ridge Leadership Computing Facility at Oak Ridge National Laboratory. “The projected performance of Summit would not have been possible without the combination of these technologies, which will give our users an exceptionally powerful tool to accomplish these goals.”

Summit to Accelerate Open Science Computing
Summit, like Titan, will be dedicated to open science, meaning that researchers worldwide will have the opportunity to apply for time on the system. It will also raise the bar for energy-efficient computing, providing five to 10 times higher performance than Titan, while using only 10 percent more power.

Sierra to Bolster National Security
Sierra will deliver five to 10 times higher compute performance than Lawrence Livermore’s current fastest system, “Sequoia,” which delivers 20 petaflops. It will be used for the National Nuclear Security Administration’s program to ensure the safety, security and effectiveness of the nation’s nuclear deterrent without testing, and nonproliferation efforts to prevent the spread of weapons of mass destruction worldwide.

Exascale Computing’s Potential and Challenge
Exascale supercomputers are anticipated to further discovery into broad areas of science, engineering and industry, such as enabling work on cures for disease, providing insights into the human brain, helping to mitigate the effects of climate change, and increasing our understanding of the origins of the universe.

However, a fundamental challenge in attaining exascale systems is achieving higher levels of performance while minimizing energy consumption, a task GPU accelerators are particularly well suited for. An exascale system built with NVIDIA’s latest GPU accelerators would consume five times less power than an x86 CPU-based system, enabling system designers to deliver extremely higher levels of energy-efficient performance.

About the NVIDIA Tesla Accelerated Computing Platform
The Tesla Accelerated Computing Platform is designed from the ground up for power-efficient, high performance computing, computational science, supercomputing, enterprise, complex data analytics and machine learning applications. It delivers dramatically higher performance and energy efficiency than a CPU-only approach. The platform deeply integrates the world’s fastest GPU accelerators, advanced system management features, accelerated communication technology and NVIDIA CUDA®, the world’s most pervasive parallel computing model.

To Keep Current on NVIDIA:

Keep up with the NVIDIA Blog, and follow us on Facebook, Google+, Twitter, LinkedIn and Instagram.
View NVIDIA videos on YouTube and images on Flickr.
Use the Pulse news reader to subscribe to the NVIDIA Daily News feed.
About NVIDIA
Since 1993, NVIDIA (NASDAQ: NVDA) has pioneered the art and science of visual computing. The company’s technologies are transforming a world of displays into a world of interactive discovery — for everyone from gamers to scientists, and consumers to enterprise customers. More information at http://nvidianews.nvidia.com/ and http://blogs.nvidia.com/.

Certain statements in this press release including, but not limited to, statements as to: the performance, effect and benefits of NVIDIA Tesla GPU accelerators, NVLink and NVIDIA GPUs are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: global economic conditions; our reliance on third parties to manufacture, assemble, package and test our products; the impact of technological development and competition; development of new products and technologies or enhancements to our existing product and technologies; market acceptance of our products or our partners’ products; design, manufacturing or software defects; changes in consumer preferences or demands; changes in industry standards and interfaces; unexpected loss of performance of our products or technologies when integrated into systems; as well as other factors detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission, or SEC, including its Form 10-Q for the quarterly period ended July 27, 2014. Copies of reports filed with the SEC are posted on the company’s website and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

© 2014 NVIDIA Corporation. All rights reserved. NVIDIA, the NVIDIA logo, Tesla, CUDA, NVLink, Maxwell, Pascal and Volta are trademarks and/or registered trademarks of NVIDIA Corporation in the U.S. and other countries. Other company and product names may be trademarks of the respective companies with which they are associated. Features, pricing, availability and specifications are subject to change without notice.

Some Logistics of Testing for Germline Mutations of the BAP1 Gene

Posted in Asbestos, Cancer, Science

BAP1 testing is a relatively straightforward process for trained persons using good equipment. Indeed, that’s true for most tests seeking to identify a mutation in a particular gene. Testing for the BAP1 germline mutation is simply one of many examples of testing for an inherited cancer syndrome, as described here at cancer.gov.

In short, biologic material – such as blood – is needed to access DNA.   An animation from the University of Utah illustrates the process of extracting DNA from a collection of cells. The animation is based on obtaining cells by swabbing the inside of a cheek. (By the way, sending in a cheek swab is all it takes to join the pool of potential stem cell (bone marrow) donors – see Be the Match.org.)

Testing for a germline BAP1 mutation can be performed by commercial labs, although one can also hire experts on BAP1.  For example, Prevention Genetics in Wisconsin offers single purpose testing specific to the BAP1 mutation.  According to a page of its website, the price runs from $250 up to $970.  The price variation depends on the precise level and type of testing used. The options shown are as follows; the variations relate to the “depth” of the sequencing done to further minimize the chances of an error:

BI-DIRECTIONAL SANGER SEQUENCING

Test Number Test Price CPT Code
1176 BAP1 Sanger Sequencing $970 81479
100 BAP1 Targeted Familial Mutations – Single Exon Sequencing $250 81479
200 BAP1 Targeted Familial Mutations – Double Exon Sequencing $370 81479
300 BAP1 Targeted Familial Mutations – Triple Exon Sequencing $440 81479

 

New Rules for Product Liability Litigation in Pennsylvania – Third Restatement Not Accepted

Posted in Liability Standards

New rules for product liability litigation are now on the books in Pennsylvania due to the opinions in Tincher v. Omega Flex Inc.. By a 4-2 vote, the Court declined to adopt the Third Restatement of Torts but did knock out a past ruling (Azzarello) on the line between strict liability and negligence, and the related jury instructions.  The vote was 4-2 because of the recent resignation of former Judge McCaffery after political and ethical brawls among members of the Court and various other senior state officials.

A “drug and device” view of the opinion (and some apparently deserved gloating) can be found in a November 21, 2014 post at Drug and Device Law blog. A November 20, 2014 post at the TortsProf blog highlighted some key points.  I’ve not yet waded through the opinion, which is said to include a lengthy review of the history of product liability law.

 

SCOTUS and a Well Told Fish Story – Kudos to Brian Murray and Meghan Sweeney

Posted in Humor

It’s great when lawyers mix humor into tight legal analysis. Therefore, I’ve taken the liberty of posting below an article that otherwise is caught behind a paywall that guards the November 20, 2014 issue of the Chicago Daily Law Bulletin.

_______________________________________________________________________________________________________________________________________________

Top court reels in Sarbanes-Oxley fish case

By Brian J. Murray

Brian J. Murray is a partner at Jones, Day, where he leads the Chicago office’s issues and appeals practice. He also teaches complex litigation at The University of Chicago Law School. He can be reached at bjmurray@jonesday.com. On Nov. 5, the U.S. Supreme Court heard arguments in Yates v. U.S., which asks the court to decide a momentous legal question of our times — whether a fish called a red grouper is a “tangible object” under an obstruction statute passed as part of the Sarbanes-Oxley Act in the wake of the Enron scandal in 2002.What does a red grouper have to do with Sarbanes-Oxley, you ask? Though it sounds fishy, the answer lies in the lower courts’ broad interpretation of the particular statute at issue.The facts of the case, as set out by the 11th U.S. Circuit Court of Appeals, are straightforward. John L. Yates was the captain of the Miss Katie, a fishing vessel operating off the coast of Florida. On Aug. 23, 2007, Officer John Jones, a federally deputized Florida Fish and Wildlife Conservation Commission officer, boarded Yates’ boat and noticed red grouper that appeared to be less than the 20-inch minimum.Jones measured the fish and placed those that were clearly under the legal size limit into wooden crates. He issued Yates a civil citation for catching undersized red grouper in federal waters and instructed him not to disturb the undersized fish, which would be seized by federal officials when the Miss Katie returned to port.Though Jones told Yates to bring the undersized fish to the dock, Yates instead instructed his crew to throw them overboard.At trial, Yates was found guilty of knowingly disposing of undersized fish to prevent the government from taking lawful custody and control of them, in violation of 18 U.S.C. Section 2232(a), and destroying or concealing a “tangible object with the intent to impede, obstruct or influence” a federal investigation, in violation of 18 U.S.C. Section 1519. He was sentenced to, and served, 30 days in jail.Only the second count is at issue before the Supreme Court, where the parties disagree whether a fish should be considered a “tangible object” for purposes of 18 U.S.C. Section 1519.The entire statute states: “Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies or makes a false entry in any record, document or tangible object with the intent to impede, obstruct or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under Title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.”The 11th Circuit held that under the plain language of the statute, a fish qualifies as a tangible object, since the Black’s Law Dictionary definition of “tangible” is “[h]aving or possessing physical form.” Thus, the court refused to consider any contrary statutory purpose and declined to apply the rule of lenity.The key to the outcome of this case will be the method of statutory interpretation that the Supreme Court uses. Yates argues that “tangible object” should be read in light of its surrounding terms, “record” and “document” to mean “a thing used to preserve information, such as a computer, server or similar storage device.”In addition, Yates argues that Congress’ purpose in enacting Sarbanes-Oxley, to prevent any “systematic campaign” like that taken by “Enron and its auditor, Arthur Andersen, to purge records and documents in anticipation of a federal investigation” informs the meaning of “tangible object” to exclude fish.

The government, on the other hand, argues that “tangible object” is unambiguous and should be interpreted based on its plain meaning. The government also claims that this Sarbanes-Oxley provision was an attempt by Congress to “close loopholes in the existing destruction-of-evidence regime,” and its clear language reflects that purpose — to “prohibit the destruction of all physical evidence.”

While the government argues that Yates’ “illogical” reading “prohibits a murderer from destroying his victim’s diary, but not the murder weapon,” the National Association of Criminal Defense Lawyers and the American Fuel & Petrochemical Manufacturers, who filed a friend-of-the-court brief in support of Yates, argue that his conviction under a broad reading of what they call an “anti-shredding provision,” is “but one more example of the overcriminalization epidemic.”

This epidemic, they argue, is a result of imprecisely drafted legislation resulting in individuals being subject to “penalties far in excess of those penalties set by Congress for the underlying crime.”

Thus, Yates, like last term’s Bond v. U.S. (see my column “Vengeance, poison and the treaty power — all in one high court case,” July 3), poses an interesting statutory construction question about whether the plain meaning of statutory language should control when such an interpretation poses constitutional and other policy concerns.

Those interested in issues of statutory construction must wait with … eh … bated breath to see which school of statutory interpretation wins out in Yates — a broad construction, or one motivated by a search for the true porpoise.

Sincere thanks to Jones, Day associate Meghan E. Sweeney for her contributions to this column.