Gilbane Group Blog

A couple of brief quotations from today's unanimous opinion help show what was at stake here. In these quotations, the "petitioner" is Andersen. Referring to the instructions given to the jury in the original trial in a Texas district court, Chief Justice Rehnquist, writing for the Court, said:

The jury instructions failed to convey the requisite consciousness of wrongdoing. Indeed, it is striking how little culpability the instructions required. For example, the jury was told that, even if petitioner honestly and sincerely believed its conduct was lawful, the jury could convict. ..."

"[D]ishonest[y]" was no longer necessary to a finding of guilt, and it was enough for petitioner to have simply "impede[d]" the Government's factfinding ability. "Impede" has broader connotations than "subvert" or even "undermine," and many of these connotations do not incorporate any "corrupt[ness]" at all. Under the dictionary definition of "impede," anyone who innocently persuades another to withhold information from the Government "get[s] in the way of the progress of" the Government.

You can see why other companies were worried by the original, lower court verdict. Given this concern with any impediment and the lack of any need to find conscious wrongdoing, companies were suddenly, and very understandably, in doubt as to whether they could safely destroy documents in the normal course of business. 

Today's ruling puts routine, orderly document destruction back on track.  As the Court noted in its opinion:

"Document retention policies," which are created in part to keep certain information from getting into the hands of others, including the Government, are common in business. ... It is, of course, not wrongful for a manager to instruct his employees to comply with a valid document retention policy under ordinary circumstances.

"Valid" and "comply" are key words in this last sentence. It goes without saying that a company needs to make sure that its retention policy is, in fact, consistent with the requirements of Sarbanes-Oxley and other laws. A company also needs a way to assess and enforce the "compliance" part of this sentence -- the policy has to be followed. Although today's decision focused on the instructions to the jury in the original trial, it is reasonable to suppose that part of the perception of "subversion" and impediment in the original case arose because Andersen had apparently not been consistent in implementing its retention policy -- until the Enron problems surfaced -- when there was suddenly a focus on hurried implementation.

Now that we know that it is once again safe to implement a retention policy and to destroy documents, it seems like a good bet that organizations will want to make sure that retention policies are perpetual, consistent, monitored, and routine.