United States: Antitrust Alert: Foreign Documents in Files of U.S. Counsel Must Be Produced Pursuant to DOJ Grand Jury Subpoena

Although the Antitrust Division of the U.S. Department of Justice (DOJ) often seeks to delay or even prevent discovery from proceeding in civil actions that relate to pending criminal antitrust investigations, recently DOJ used such discovery to its advantage. On December 7, 2010, the Ninth Circuit Court of Appeals ruled that, pursuant to a grand jury subpoena, U.S. law firms must turn over to DOJ their clients' foreign documents held in the United States that were obtained in conjunction with pending civil litigation, even though such documents originated outside of the United States and otherwise were "outside the grasp of the grand jury." The Ninth Circuit's ruling is significant because it underscores DOJ's aggressive approach to criminal antitrust investigations, and it confirms for all U.S. counsel, including in-house counsel, that documents within their possession are not immune from discovery.

In re Grand Jury Subpoena, served on White & Case LLP, et al.

DOJ began investigating allegations of price fixing in the global liquid crystal display (LCD) panel industry in 2006. The investigation prompted a number of civil suits against the companies under investigation. During discovery, the defendants produced documents originating outside of the United States, thus placing the foreign documents on U.S. soil, in the possession of the parties' U.S. law firms. Due to jurisdictional and comity issues, DOJ often has difficulty obtaining documents and evidence located abroad. Seeing an opportunity to side-step these difficulties, DOJ served grand jury subpoenas on the U.S. law firms seeking the foreign documents turned over in the civil cases. Pursuant to the protective order entered in the civil action, the law firms refused to produce the material and moved to quash the subpoenas. The district court quashed the subpoenas and passed the decision to the Ninth Circuit, requesting guidance because "the motions to quash raise novel issues with potentially far-reaching implications about the power of the grand jury and the relationship between grand jury proceedings and civil discovery of unindicted foreign defendants."

The Ninth Circuit accepted the invitation and enforced the subpoenas. Because the government did not engage in any bad faith tactics (such as collusion with the civil litigants), and because there were no claims of privilege attached to the documents, the Ninth Circuit applied the previously established "per se rule" that a grand jury subpoena trumps a civil protective order. The court recognized that by chance of the civil litigation "the documents have been moved from outside the grasp of the grand jury to within its grasp." According to the court, "No authority forbids the government from closing its grip on what lies within the jurisdiction of the grand jury."

Observations

The Ninth Circuit's ruling may have far-reaching implications.

First, it demonstrates how DOJ can aggressively use follow-on civil litigation to its advantage. DOJ commonly seeks to stay or limit discovery in civil actions relating to an ongoing criminal investigation. Indeed, DOJ sought such a limitation in the underlying LCD civil cases amid concerns that the companies under investigation would learn sensitive information about the grand jury proceedings. Having lost that battle, DOJ seized on the opportunity to use the civil discovery to further its own LCD investigation. Moreover, while DOJ usually refrains from using grand jury subpoenas to obtain foreign-based documents, DOJ's efforts in this action underscore the fact that, when possible, it will seek such documents through other avenues. As recognized by the district court, the Ninth Circuit decision may have "far-reaching implications about the power of the grand jury."

Second, this case confirms that non-privileged documents within counsel's possession in the United States, even if originally beyond the reach of the government, can be the sought through a grand jury subpoena. Accordingly, in-house and outside counsel should be cognizant of holding non-privileged, foreign documents in their files in the United States, particularly when those documents are relevant to a pending grand jury investigation.

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