Last week, Deputy Attorney General Sally Q. Yates announced new Department of Justice (DOJ) policies intended to strengthen the DOJ's efforts to hold corporate executives accountable for unlawful conduct in a memorandum entitled Individual Accountability for Corporate Wrongdoing.1 This advisory will address potential implications of the new policy on criminal antitrust cases investigated and prosecuted by DOJ's Antitrust Division.
The Justice Department's Policy Changes
The memorandum, also known as the "Yates Memo," outlines six policy changes or clarifications intended to strengthen the DOJ's efforts to hold corporate executives accountable. In explaining the rationale for the policy changes, Deputy Attorney General Yates emphasized the importance of individual accountability in corporate cases, noting that it "deters future illegal activity," "incentivizes changes in corporate behavior," and "ensures that the people who engage in wrongdoing are held responsible for their actions."2
The key policy changes outlined in the Yates Memo are as follows:
- First, companies must "identify all individuals involved in the wrongdoing, regardless of their position, status, or seniority in the company"3 to be eligible for any cooperation credit.
- Second, DOJ attorneys should focus on individuals from the outset of corporate investigations.
- Third, criminal and civil DOJ attorneys should remain in "early and routine communication" with each other because the best way to build a case is to ensure that "everyone's talking to each other from the very beginning."4
- Fourth, the DOJ will not release individuals from criminal or civil liability in corporate resolutions except in "extraordinary circumstances"5 or where there are approved DOJ policies such as the Antitrust Division's Corporate Leniency program.
- Fifth, DOJ attorneys must have a "clear plan"6 to resolve individual cases in order to seek a corporate resolution, and any individual releases or declinations must be approved by the relevant United States Attorney or Assistant Attorney General.
- Lastly, civil attorneys should focus on individuals as well.
A. No Appreciable Impact Foreseen for Antitrust Amnesty Applicants
The Yates Memo states that it will not alter the current operation of the Antitrust Division's Corporate Leniency Program, which has been highly effective over the past several decades in uncovering illegal cartel activities. Under the Leniency Program ("amnesty"), a company can avoid criminal convictions and fines and obtain a wholesale grant of immunity for all its employees by being the first to confess participation in illegal cartel conduct. Under existing policy, an amnesty applicant must make full disclosure of its cartel involvement in order to qualify; inasmuch as a qualifying applicant will secure both corporate immunity and an agreement to refrain from prosecuting any of its employees, it already has every incentive to disclose the full extent of its wrongdoing. Therefore, the new policy can be expected to have little, if any, effect on the Leniency Program. The real potential for a change in practice reveals itself when companies under investigation who are not amnesty applicants consider their options.
B. Potential Implications for non-Amnesty Companies in Antitrust Investigations
The Yates Memo's effect on cooperating companies in cartel investigations who are not leniency applicants remains to be seen. One of the most significant developments of the Yates Memo is the instruction that a company's disclosure of information about individuals involved in or responsible for the wrongdoing is now a threshold requirement to receiving any cooperation credit at all, rather than simply one factor that the DOJ considers when deciding whether a company's cooperation warrants a reduction in a potential sentence. Moving forward, according to Deputy Attorney General Yates, DOJ will not allow companies to "pick and choose what gets disclosed" or obtain "partial credit for cooperation that doesn't include information about individuals."7 Further, she states that DOJ will not "let corporations plead ignorance" and will require that they engage in investigations to identify all responsible individuals and then provide all non-privileged evidence implicating those individuals.8 Yates stated that the "purpose of this policy is to better identify responsible individuals, not to burden corporations with longer or more expensive internal investigations than necessary"9 and encouraged defense attorneys to engage in detailed discussions with DOJ attorneys during their internal investigations.
The concept of zero credit for other forms of cooperation is new. Under prior policy, it was possible to provide substantial cooperation -- by disclosing the conduct of colluding competitors, producing foreign-located documents, making available witnesses at the company's expense (frequently witnesses beyond the reach of the federal grand jury ), and the like -- and earn cooperation credit. Now, under the Yates Memo, such efforts will earn no credit if they are not accompanied by a disclosure about culpability of individuals within the company. It will be important to follow how this policy develops in practice, as it is typical in cartel cases that the amnesty applicant will already have disclosed culpable employees of competitors as part of the applicant's cooperation. As long as the new obligation is merely to proffer facts -- such as documents exposing competitor communications -- there will be no change. DOJ's objective should be to learn facts that enable it to make a charging decision about individuals, not to hear counsel's opinions about what inferences to draw from the evidence. In international cartel cases, that interest, combined with the Yates Memo's directive to bring cases against individuals (discussed below), may put increased pressure on companies to produce foreign located documents and witnesses. That kind of cooperation already is common in cartel cases. If, however, the new policy becomes a tool for prosecutors to insist that company counsel express views on the potential culpability of senior executives -- where there is often disagreement about whether particular employees knew about or countenanced cartel conduct -- the new policy could work a real change in interaction between DOJ and cooperating companies.