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DOJ Amnesty Agreements Could Be Subject To Public Disclosure

By Sherry L. Talton, Litigation News Associate Editor – September 17, 2008

The D.C. Circuit Court of Appeals recently ruled that amnesty agreements made by the Department of Justice Antitrust Division may be subject to public disclosure under the Freedom of Information Act (FOIA) [PDF].

A three-judge panel in Stolt-Nielsen Transportation Group, Ltd. v. United States [PDF] reversed a summary judgment that denied Stolt-Nielsen’s FOIA request for redacted versions of amnesty agreements between the Department of Justice (DOJ) and about 100 corporations, made as part of the Antitrust Division’s Corporate Leniency Program. This decision is the latest development in Stolt-Nielsen’s longstanding battle against the DOJ regarding its participation in the Leniency Program.

The D.C. Circuit’s opinion is really just “business as usual under FOIA,” and is unlikely to have “any effect beyond the case at hand,” opines John McDowell, Dallas, cochair of the ABA Section of Litigation Antitrust Law Committee.

Created in 1978 and revised in 1993, the DOJ’s Leniency Program grants pardons to companies that confess criminal violations of the Sherman Act. By cooperating with the Antitrust Division, a company admits to its role in illegal price-fixing activity and provides evidence in the prosecution of its competitors. The pardon recipient escapes criminal charges. The division also protects the identity of the applicant, which provides a substantial benefit for cooperating with the government.

The confidentiality provision “is a very important part of the program, which has been an effective tool for the Antitrust Division,” says James A. Wilson, Columbus, Ohio, chair of the ABA Section of Antitrust Law.

Since 1999, the DOJ has imposed criminal fines greater than $100 million to 11 companies as a result of the Leniency Program.

In 2002, Stolt-Nielsen officials discovered that the Luxembourg shipping giant had participated in a price-fixing conspiracy with two of its competitors and applied for protection under the Leniency Program. It then entered into an amnesty agreement with the DOJ, which granted a pardon in exchange for the company ceasing all anticompetitive activity and cooperating in the investigation against its coconspirators. Stolt-Nielsen’s assistance allowed the Antitrust Division to collect a total of $62 million in fines from two coconspirators and secure jail sentences for three high-ranking executives.

Then, in 2003, the Antitrust Division asserted that Stolt-Nielsen had failed to promptly withdraw from the antitrust conspiracy and it revoked the company’s amnesty agreement. This resulted in the public disclosure of Stolt-Nielsen’s amnesty agreement and prompted a slew of litigation, as Stolt-Nielsen tried to force the DOJ to honor its amnesty agreement. Eventually, a U.S. district court upheld the pardon and dismissed the DOJ’s indictments of Stolt-Nielsen and its executives.

During the litigation, Stolt-Nielsen, made an FOIA request for the approximately 100 pardons the DOJ had granted others since 1993, excluding the names and other identifying information of the applicants.

The DOJ claimed the agreements were exempt from disclosure under FOIA, and Stolt-Nielsen filed a separate federal lawsuit in Washington, D.C., to obtain the documents.

In response, the DOJ filed a Vaughn Index [PDF], which identified the specific FOIA exemptions the DOJ claimed for each requested document. It initially won a summary judgment, preventing disclosure of those documents under FOIA.

On appeal of that judgment, the DOJ argued that two exemptions applied to all of the requested amnesty agreements: (1) Exemption 7(A) [PDF], which allows the government to withhold information if its disclosure “could reasonably be expected to interfere with [law] enforcement proceedings,” and (2) Exemption 7(D) [PDF], which bars disclosure of information that would “disclose the identity of a confidential source.”

Although the D.C. Circuit agreed that the DOJ had established “at least a colorable basis for the assertion of Exemption 7(A) or 7(D),” it remanded the case back to the district court to determine whether it could provide parts of the requested documents without revealing the exempt portions.

Members of the antitrust bar will be watching very closely to see how the district court handles this issue case on remand, Wilson says. “It’s a little too early to get excited about this decision,” he notes.

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