There was an important post over the weekend on the White Collar Crime Prof Blog. Ellen Podgor flagged a recent case (here) with serious implications for companies with deferred prosecution agreements.
An April 17, 2009 opinion from the DC Court of Appeals in US v. The Williams Companies held that a former Williams employee who’s been indicted has a right to discover documents the company produced as part of its cooperation with federal investigators. A copy of the opinion can be downloaded here.
Prof Podgor’s wisdom: You may think that your back is against the wall to enter into a deferred prosecution agreement, but before you agree to waive the attorney-client privilege, be aware of the long-term ramifications of this decision.
Here’s what happened: Williams’ deferred prosecution agreement to resolve trading-related offenses provided that its cooperation with the government would include not asserting the attorney-client privilege or work product protection “as to certain factual documents from the internal investigation.” The Justice Department acknowledged that Williams’ cooperation was “a factor in the decision to defer criminal prosecution.” (Williams also had to pay a $50,000,000 penalty to settle the charges.)
Several employees were eventually indicted, including Scott Thompson, an energy trader. He was charged with conspiracy to commit wire fraud (18 U.S.C. § 371 and § 1343) and to manipulate gas prices in violation of the Commodities Exchange Act (7 U.S.C. § 13(a)(2)). He filed a motion under Brady v. Maryland, 373 U.S. 83 (1963) and Federal Rule of Criminal Procedure 16(a)(1)(E)(i) to compel the United States to produce information material to preparing his defense and provided to the government by Williams. Both the government and Williams opposed the motion.
But the court said Williams “independently and voluntarily chose to participate in a thorough disclosure program, in return for which it received the quid pro quo of lenient punishment for any wrongdoing exposed in the process.” Quoting from In re Subpoenas Duces Tecum, 738 F.2d 1367, 1372 (D.C. Cir. 1984) (also known as Tesoro). So allowing Williams “to select according to [its] own self interest to which adversaries [it] will allow access to the materials” would be inconsistent and unfair.
On that basis, the DC Court of Appeals remanded so the trial to court could determine what Thompson is entitled to under Brady. “Because the government’s criminal investigation,” the court said, “was far broader than [Williams] and its employees and did not focus on Thompson alone, discovery by Thompson must proceed in a manner that avoids a fishing expedition. . .”