Antitrust Alert: Air Cargo Court Authorizes Disclosure of Antitrust Grand Jury Testimony after Joint Motion of Civil Plaintiffs and DOJ
The U.S. magistrate judge in the consolidated civil antitrust cases challenging alleged collusion in air cargo charges has authorized disclosure of portions of the grand jury testimony of two witnesses who had testified during the criminal investigation conducted earlier by the U.S. Department of Justice Antitrust Division. The case is In re Air Cargo Shipping Services Antitrust Litigation, No. 06-MD-1775 (EDNY).
This decision allowing disclosure of grand jury testimony is a reminder that grand jury "secrecy" is relative. When a company's employee testifies before a grand jury, there is a palpable risk that the testimony will be subject to possible disclosure in related civil litigation. However, this Air Cargo decision is more noteworthy for the fact that DOJ joined plaintiffs' disclosure motion and argued that plaintiffs' need for disclosure trumped any need for grand jury secrecy. The result was a troubling ruling that appears to have given little or no weight to the important interest in maintaining grand jury secrecy.
The long practice of maintaining grand jury secrecy is codified in Rule 6(e) of the Federal Rules of Criminal Procedure. The rule generally prohibits disclosure of statements before a grand jury and applies to most persons directly involved in the proceeding, including grand jurors and government attorneys, but the prohibition does not extend to grand jury witnesses. Further, the secrecy mandate of Rule 6(e) is not absolute. The rule provides specific exceptions, including the exception relied on in Air Cargo that authorizes a court to allow disclosures "preliminary to or in connection with a judicial proceeding" (Rule 6(e)(3)(E)(i)).
The seminal case on the application of Rule 6(e)(3)(E)(i) is the Supreme Court's 1979 decision in Douglas Oil Co. vs. Petrol Stops Northwest, in which civil antitrust plaintiffs sought access to grand jury testimony given during a related criminal investigation. The Supreme Court confirmed the long tradition of safeguarding grand jury secrecy and explained that, without affording appropriate protection for the secrecy of grand juries, witnesses would be reluctant to provide full and candid testimony; there would be a risk of flight on the part of persons under investigation; and the rights of the innocent accused would be compromised.
At the same time, the Petrol Stops Court recognized that there are circumstances when the disclosure of "discrete portions" of grand jury transcripts may be justified in subsequent litigation in order to avoid an injustice. However, due regard had to be given to the interests in maintaining grand jury secrecy. Accordingly, courts considering requests for the disclosure of grand jury testimony must balance a moving party's particularized need for disclosure against the need for continued grand jury secrecy and determine whether "the need for disclosure is greater than the need for continued secrecy." Moreover, although a party's burden of showing need might be lessened once a grand jury's investigation has concluded, a court still must consider the effect of disclosure on the functioning of future grand juries, including the effect on future grand jury witnesses.
In Air Cargo, both the plaintiffs and DOJ asked the court to disclose the testimony of two grand jury witnesses, each of whom had been deposed in the pending civil litigation. DOJ also agreed to assist plaintiffs by comparing the witnesses' grand jury transcripts with selected portions of their deposition transcripts, "to determine whether any portions [of the grand jury transcripts] might be appropriate for disclosure." DOJ submitted the results of its comparison to the court and advocated for the disclosure of selected portions of the grand jury transcripts to plaintiffs.
Magistrate Judge Pohorelesky ruled that the plaintiffs had met their burden of showing "particularized need" because "portions of the grand jury transcripts…may well serve to refresh the witnesses' recollection or to impeach them." At the behest of DOJ, the court discounted any need for continued grand jury secrecy and held that disclosure was warranted, "[g]iven the limited volume of the grand jury testimony at issue and the fact that the government is not asserting that continued grand jury secrecy should trump the plaintiffs' need for [the] testimony."
The Air Cargo court's summary dismissal of any argument for continued grand jury secrecy is troubling and contrary to the Supreme Court's instructions in Petrol Stops. Moreover, the eagerness of DOJ to advocate for disclosure and to minimize the continued need for grand jury secrecy is surprising. Even if the grand jury in Air Cargo was no longer sitting, and this is difficult to ascertain from the public record, the Supreme Court has made clear that the interest in maintaining grand jury secrecy continues even afterwards. In addition, as pointed out in Petrol Stops, the likelihood of future disclosure can adversely impact the willingness and candor of witnesses, and the need for grand jury secrecy "is heightened where the witness is an employee of a company under investigation." This concern is particularly applicable in antitrust investigations where grand jury witnesses often include employees of companies under investigation.
It might be hoped that DOJ's decision to advocate for disclosure of grand jury testimony in Air Cargo is an aberration and can be explained by particular circumstances not discernible from the public record. If it comes to be expected that DOJ stands ready to assist private plaintiffs or others in lifting the veil of grand jury secrecy, the effectiveness of future grand juries will be adversely affected.
For more information, please contact your principal Jones Day representative or either of the lawyers listed below.
Stephen J. Squeri
John M. Majoras
Washington / Columbus
+1.202.879.7652 / +1.614.281.3835
Jones Day prepares summaries of significant antitrust enforcement, litigation, and policy events as a service to clients and interested readers, to provide timely insight on antitrust and competition law developments relevant to business, but not as legal advice on any specific matter. Please visit our Publication Request form to add your name to our distribution list.