Business Law I Case Study Arthur Andersen Llp V. United States

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Arthur Andersen LLP v. United States
The parties: In Arthur Andersen LLP v. United States, the plaintiff was the United States. The United States was also the Appellee. Arthur Andersen is the defendant as well as the appellant. The history: Arthur Andersen was found guilty at the jury trial. The U.S. Court of Appeals for the Fifth Circuit also affirmed him guilty. The U.S. Supreme Court reversed Andersen’s convictions due to “flawed jury instructions.” The facts: Arthur Anderson formed a crisis-response team shortly after the Wall Street Journal had suggested the issues at Enron. The company kept encouraging the employees to follow Andersen’s document retention policy and Odom stated that “If [documents are] destroyed in the course of [the] normal policy and litigation is filed the next day, that’s great...We’ve followed our own policy, and whatever there was that might have been of interest to somebody is gone and irretrievable.” As Enron went under the heat of informal to formal investigation with requests for documentation, the company kept encouraging its employees to follow the “policy.” It wasn’t until the SEC served Enron and Andersen with subpoenas for records that they told their employees to stop shredding and the game was over. The plaintiff’s theory: The jury and Court of Appeals found that the above actions made the petitioner guilty of violating Title 18 of the United States Code that provides criminal sanctions for those who obstruct justice. They believed he intentionally had the knowledge of what was going on and intentionally destroyed the documents that proved the scandal to be true. The defendant’s theory: Arthur Anderson believed that he was only following his company’s policy by ensuring it was being followed. He did not violate a law because once he was served the subpoena, the document shredding halted immediately. The legal issue: Did Arthur Anderson violate Title 18 of the United States Code by knowingly persuading his employees to...
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