The U.S. Department of Justice Antitrust Division (DOJ) announced two significant changes to its practice regarding corporate plea agreements for individuals charged with antitrust violations, such as price fixing and bid rigging. First, DOJ will no longer exclude (or "carve out") employees from non-prosecution agreements for reasons unrelated to culpability. Second, DOJ will no longer include the names of carved-out employees in the publicly filed plea agreement itself. Both are welcome changes that provide uncharged individuals with protection against the public stigma of potentially being perceived the subject of a criminal investigation.
In the past, DOJ plea agreements included a provision offering non-prosecution protection to those company employees who cooperated with the investigation and whose conduct did not warrant prosecution. However, DOJ carved out from the provision offering non-prosecution those employees who were believed to be culpable. Additionally, in certain circumstances DOJ also carved out (i) employees who refused to cooperate with the investigation, (ii) employees against whom DOJ was still developing evidence, and (iii) employees with potentially relevant information who could not be located. The names of all carved-out employees were included in the publicly-filed corporate plea agreements.
After a thorough review of its practices, DOJ decided to implement two changes. Employees who DOJ has reason to believe were involved in criminal wrongdoing and who are potential targets of the investigation will continue to be carved out. However, individuals will no longer be carved out for reasons unrelated to culpability. Second, DOJ will not include the names of carved-out employees in the plea agreement itself. Instead, the agency will include those names in an appendix and ask the court for leave to file the appendix under seal.
Commentators had been calling for DOJ to make these changes for some time. DOJ has said all plea agreements should be consistent with the Principles of Federal Prosecution that recognize that “[i]n all public filings and proceedings, federal prosecutors should remain sensitive to the privacy and reputation interests of uncharged third-parties…and should strive to avoid unnecessary public references to wrongdoing by uncharged third-parties.” The practice of publicly disclosing the names of individual carve-outs conflicted with those principles. And DOJ’s stated interests underlying the old policy – the public’s First Amendment right of access to filed plea agreements, the need for contractual clarity for all employees of the corporate defendant, and the right of victims to access plea agreements under the Crime Victims’ Rights Act of 2004 – did not outweigh the harms caused by the public disclosure of a carve-out’s identity, including potential damage to personal reputation, the public stigma of being perceived a criminal, and the resultant significant negative impact on relationships with colleagues and others within the profession. The prior policy lumped together those whom DOJ thought may be culpable with those who were simply uncooperative with the investigation or whom DOJ could not locate. Publishing the list prejudiced the non-culpable and uncooperative employees, who received the public stigma of potentially being labeled a criminal.
DOJ acknowledged these criticisms in its recent announcement: “Absent some significant justification, it is ordinarily not appropriate to publicly identify uncharged third-party wrongdoers.” However, DOJ also made clear that it will continue to carve out any employees whose conduct may warrant prosecution, demand the full cooperation of any individuals who seek the benefit of non-prosecution protection, and revoke the protection for anyone who does not fully and truthfully cooperate with investigations. Thus, individuals cannot be uncooperative with DOJ investigations and expect to escape carve-out treatment in all instances.
Assistant Attorney General Bill Baer issued a statement regarding the changes, noting that the “Antitrust Division’s efforts to investigate and prosecute price fixing and other cartel conduct have produced outstanding results in holding both corporations and individuals accountable for their wrongdoing.” Baer emphasized that DOJ is committed to building on these past successes through the continued use of corporate plea agreements.
While these changes are a positive development, they will be applied on an individual basis. The factors that go into the value determination of whether an individual is considered "culpable" (and thus will be carved out) or simply “uncooperative” (and not carved out) will take on even greater significance.