Wednesday, December 8, 2010
Court Says U.S. May Subpoena Documents in Price-Fixing Probe
Production of Discovery Materials in Civil Case Subjected Them to Grand Jury Investigation, Panel Says
By STEVEN M. ELLIS, Staff Writer
A litigant who produces foreign documents in a civil case in the United States risks having them subpoenaed for use in a criminal case, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
A three-judge panel said that four law firms must give foreign documents related to a civil antitrust suit over price-fixing in the LCD screen industry to federal prosecutors seeking the materials for a grand jury investigation, despite a civil protective order.
Absent evidence of bad faith or a claim that materials are privileged, Senior Judge John T. Noonan wrote, a per se rule that a grand jury subpoena takes precedence over such an order applied to documents already present in the United States.
Attorneys at the firms obtained the documents after the United States in 2006 began an antitrust investigation into allegations that a group of companies participated in a decades-long conspiracy to bump up the price of screens used in mobile phones, televisions, computer monitors and other products.
When companies that use LCD panels in their products and individual buyers learned of the government investigation, they brought civil suits against Toshiba, Sharp Corp., LG Display Co. Ltd., Hitachi Displays Ltd. and others. Those cases were consolidated before U.S. District Judge Susan Illston of the Northern District of California, and the parties agreed to a protective order covering materials produced abroad that were brought to the United States during discovery.
The government issued subpoenas to the law firms seeking the materials for the grand jury after Illston issued a ruling allowing it to review, but not copy, the documents in the civil proceeding.
When the law firms moved to quash—accusing the government of unfairly trying to piggyback on civil discovery and of shirking long-standing procedure on acquiring foreign documents, Illston punted. Reasoning that the motions “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,” she said it was “more prudent” to quash and let the Ninth Circuit sort it out.
On the government’s appeal, however, Noonan rejected the law firms’ argument that Illston’s decision was a reasonable exercise of discretion. Instead, he said, it was merely “a passing of the decision” and a “request for guidance.”
Noting that no collusion between the civil litigants and the government had been suggested or shown, and that the firms made no claim that the documents were privileged, Noonan wrote that a per se rule that a grand jury subpoena takes precedence over a civil protective order applied to documents already in the country.
“By a chance of litigation, the documents have been moved from outside the grasp of the grand jury to within its grasp,” he said. “No authority forbids the government from closing its grip on what lies within the jurisdiction of the grand jury.”
Judge Richard A. Paez and U.S. District Judge Kevin Thomas Duffy of the Southern District of New York, sitting by designation, joined Noonan in his opinion.
The case is In re Grand Jury Subpoenas, 10-15758.
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