On April 12, 2013, the Department of Justice’s Antitrust Division altered a policy affecting the employees of companies that plead guilty to criminal antitrust violations.1 The altered policy implicates employees that qualify for “carve-outs,” the practice of exempting certain employees from the immunity benefits of relevant plea agreements. The new policy may mean fewer candidates for carve-out and will certainly mean less public exposure for carved-out employees.
Typically, the Antitrust Division’s corporate plea agreements have included liability protection for cooperative employees whose conduct does not warrant prosecution. The practice inevitably required a distinction between employees who are eligible for plea-agreement protections and those who are not. Before the policy change, the Antitrust Division identified ineligible employees as: (1) those the DOJ believes were culpable, (2) those who refused to cooperate with the investigation, and (3) those facing further investigation.2 After identifying the carved-out individuals, the Antitrust Division then published a list of their names in the actual plea agreement.
While long a mainstay of the Antitrust Division, this custom of publicizing individual carve-outs was out of step with general DOJ practice. DOJ’s other divisions avoid identifying third parties in plea agreements, as does every US Attorney’s office. The Antitrust Division had strenuously defended the practice, citing the public’s First Amendment right of access and similar rights granted to victims by the Crime Victims’ Rights Act of 2004.3 The threat of public disclosure of individuals could also serve as leverage in negotiating the plea agreements.
The new policy both narrows carve-out qualifications and limits public exposure for actual carved-out individuals. The DOJ will now only carve out those employees whose conduct may warrant antitrust prosecution. Employees who are merely uncooperative are no longer candidates for carve-out. In addition, the DOJ will no longer publish the roster of carved-out individuals in the plea agreements. Rather, the list of names will only appear in an appendix that the DOJ will ask the court to file under seal. While the request to file under seal will be subject to the court’s discretion, such requests will almost certainly be granted.
For many, the new policy is a welcome improvement. The Antitrust Division’s previous policy grouped uncooperative employees with potentially culpable ones, rendering the former guilty by association with the latter. Associated publicity only exacerbated this effect, subjecting uncharged individuals to near-automatic suspicions of guilt and potentially irreparable harm to their reputations. The new policy serves to protect the uncharged individuals while also adding some clarity to the plea bargain process. Corporations and their employees can now be fairly certain that carve-outs are reserved for likely targets of future prosecution.
Bill Baer announced the policy change in his first public statement as assistant attorney general for the Antitrust Division, a change that was almost certainly influenced by the private antitrust bar. The bar has argued that the previous practice unduly discounted the privacy and reputational interests of relevant corporations and employees.4 The Antitrust Division had litigated the issue previously, successfully arguing that mere identification as a carve-out falls safely short of any allegations of guilt or any implication that the individual will actually be charged, and “possible stigma from carve out status” alone “does not give rise to a due process violation.”5 Under Baer, the Antitrust Division has apparently had a change of heart. In announcing the new policy, Baer stated, “Absent some significant justification, it is ordinarily not appropriate to publicly identify uncharged third-party wrong doers.”6
While the change is certainly worth noting, there is reason to doubt whether it will actually lower the number of individual carve-outs. For one thing, the Antitrust Division could identify more employees who refuse to cooperate with an investigation as ones whose conduct may warrant prosecution, thereby qualifying those employees for carve-outs. Baer may have indicated as much in his statement, saying:
“We will continue to demand the full cooperation of anyone who seeks to benefit from the non-prosecution of a corporate plea agreement, and will revoke that protection for anyone who does not fully and truthfully cooperate with division investigations.”7
Still, the change will allow carved-out employees an appropriate measure of privacy until the Antitrust Division decides whether or not to actually pursue prospection. Maintaining anonymity during that time period appropriately protects the reputations and careers of un-charged individuals, those who were unnecessarily stigmatized under the Antitrust Division’s previous practice.
A copy of the statement issued by Assistant Attorney General Baer is available here.