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Limiting Early Discovery in Parallel Criminal and Civil Cases

Companies are increasingly facing parallel proceedings involving government investigations and follow-on private litigation. These complex cases often involve competing interests between the parties that can influence a judge’s determination on discovery timing and process.

  • Private plaintiffs are incentivized to obtain as much information about the case as early as possible to support their allegations and avoid having the case dismissed on summary judgment.

  • Defendants hope to delay, or save altogether, the expenditure of potentially millions in discovery costs.

  • The government has a strong interest in preserving the confidentiality and integrity of their investigation without interference from civil plaintiffs.

WHAT HAPPENED:

  • Federal judge recommends six months for discovery stays. At the American Bar Association 65th Annual Spring Meeting (ABA Spring Meeting), Judge Susan Illston of the US District Court of the Northern District of California, who presided over In re TFT-LCD (Flat Panel) Antitrust Litigation, stated that government investigations take precedence over private litigation and the court must actively aim to preserve the integrity of the criminal investigation. Judge Illston recommended a baseline stay of six months, while pushing back against open-ended discovery stays. During this period, plaintiffs may be able to obtain non-defendant testimony without significant interference into the government investigation. The government could use the six months to develop their case before the court reassesses the status of the proceedings at the close of the period.

  • DOJ Chief recommends that plaintiffs work with government attorneys to reach an agreement regarding scope of discovery in the early going. In her remarks at the ABA Spring Meeting, Lisa Phelan, Chief of the Washington Criminal I Section of the US Department of Justice (DOJ), Antitrust Division (Division) explained that plaintiffs can often obtain existingbusiness records, including transaction data and financial documents, in the early stages of the litigation. However, while it is not unlawful for plaintiffs to obtain documents previously produced pursuant to grand jury subpoena, DOJ will oppose requests for the production of all documents previously produced to the grand jury. Phelan noted that if defendants provided everything produced to the grand jury, it would reveal too much about the scope of the Division’s investigation.

WHAT THIS MEANS:

  • Defendants should coordinate early with the government regarding the scope of a potential stay. Defendants likely share an interest with the government in avoiding early and broad discovery.

  • Defendants can legitimately object to defendant depositions at the early stages of litigation if the company is involved in a government investigation. However, the court may allow for non-defendant depositions to proceed.

  • Defendants should avoid producing all documents previously produced to the grand jury if plaintiffs request these documents. It is likely that the government will object to such requests. Companies defending parallel proceedings should consider whether they can legitimately object to producing existing business records in the early stages of the litigation.

In the event of overly broad or premature discovery requests from plaintiffs, it is likely the court will stay discovery for a period of time. However, defendants should begin document and data collection as early as possible to maximize their preparedness for the discovery process.

© 2017 McDermott Will & Emery

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About this Author

Gregory E. Heltzer, Mergers and Acquisitions Lawyer, Antitrust Attorney, McDermott Will Emery, Law Firm
Partner

Gregory E. Heltzer is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm's Washington, D.C., office.  He focuses his practice on defending mergers and acquisitions before the Federal Trade Commission, Department of Justice, state antitrust authorities and foreign competition authorities.  In addition, his practice also includes complex antitrust litigation, government investigations and antitrust counseling (e.g., advising agricultural cooperatives on the requirements of the Capper Volstead Act).

202-756-8178
Mary Strimel, McDermott Law Firm, Merger and Acquisition Attorney
Partner

Mary Strimel advises and defends clients on mergers, acquisitions, criminal price-fixing, class actions and other antitrust investigations before the US Department of Justice, the US Federal Trade Commission, state and federal courts, and foreign competition authorities. Her criminal and civil antitrust work has spanned a wide range of industries, including transportation, software, financial markets, data publishing, chemicals, pharmaceuticals, glass, industrial products, alcoholic beverages, and telecommunications.

Mary was an attorney with the DOJ Antitrust Division for over a decade, most recently as the founding Chief of a criminal enforcement section launched in Washington, DC. Mary has extensive experience handling a full range of antitrust criminal litigation and investigative activities, including covert investigations, search warrants, witness interviews, plea agreements, coordination with foreign enforcement agencies, conduct of parallel civil/criminal investigations, grand jury presentations, trial preparation, and electronically stored information

202-756-8249
Associate

Lauren Salins focuses her practice on antitrust class action litigation and criminal antitrust and cartel matters. Lauren has represented both US and international companies and executive officers in federal court cases and class actions. She has experience conducting internal investigations for global corporations, and counseling companies and executives in antitrust investigations brought by the United States Department of Justice, Canadian Competition Bureau and Japan Fair Trade Commission.

312-984-7698