Forced Disclosure of Documents: Subpoena to Produce Documents In Criminal Case Trumps Protective Order in Civil Case

The Ninth Circuit issued a ruling earlier this month that has handed the federal government another tool in its discovery belt and provides defense counsel with fair warning as they prepare to defend white-collar clients. The Ninth Circuit has ordered three U.S. law firms (White & Case LLP, K&L Gates LLP, and Nossaman LLP) to turn over foreign documents that the firms received through their representation of foreign companies in a civil antitrust class action lawsuit involving liquid crystal display (LCD) products to a grand jury empanelled by the Department of Justice (DOJ). The DOJ issued grand jury subpoenas for the documents to aid its investigation of alleged criminal antitrust violations by the foreign companies. The documents were produced from locations in foreign countries to the law firms as part of a civil class action suit but were protected by a protective order issued by the judge handling the civil suit. The foreign documents were originally outside the access of the grand jury, since they were located outside the United States. However, the Ninth Circuit ruled that after the law firms were provided the documents in the United States for the civil antitrust case, the documents took on the status of any ordinary document located in this country and becomes available to the grand jury. In ordering the law firms to turn over documents from the civil antitrust case to the grand jury and the DOJ in connection with a criminal matter, the Ninth Circuit reminded the litigants that a grand jury subpoena supersedes a civil protective order. 

In 2006, the United States was conducting an antitrust investigation into alleged criminal conduct. Soon after this investigation became public, a number of civil suits were filed by private plaintiffs against the companies under investigation. The litigation resulted in the production by the civil defendants (the foreign companies) of documents originating outside the United States. As a result of the production for this civil antitrust case, the documents came into the possession of the law firms in the United States.

Court’s Reasoning for Ordering Turnover of Documents

In ordering the law firms to turn over the documents, the Ninth Circuit ruled that a grand jury subpoena, which is issued in federal criminal investigations, trumps a civil protective order issued to protect disclosure of documents. The court determined that the grand jury subpoena should take precedence because: (i) there was no collusion between the plaintiffs in the civil antitrust suit and the DOJ that would suggest a subterfuge to gain access to the foreign documents, and (ii) the law firms did not claim that the documents were privileged. 

In explaining its decision, the court stated:

“By a chance of litigation, the documents have moved from outside the grasp of the grand jury to within its grasp. No authority forbids the government from closing its grip on what lies within the jurisdiction of the grand jury.”

Key Takeaways

Companies and legal counsel should remain cognizant of:

1. Potential consequences of a decision to bring documents into the United States for the purpose of use in a civil case, including the possibility that the Department of Justice will be able to access such information for use in a criminal case, and
    
2. The importance of considering the applicability of attorney-client and work-product privileges to foreign documents whether or not brought into the United States, and whether those privileges are recognized by the foreign jurisdictions or if the foreign jurisdictions have alternative protections that may be asserted in making decisions to bring documents into the country.

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