Next week the Justice Department will file its response to a motion to dismiss made by Stolt-Nielsen Transportation Group and its two co-defendants in a criminal antitrust case now pending in Philadelphia. Four years ago, Stolt-Nielsen received amnesty from the DOJ in exchange for cooperating with the Antitrust Division’s price-fixing investigation of the parcel tanker industry. The amnesty was revoked less than three months later, however, after the Division accused Stolt-Nielsen of misrepresenting the timeline of the alleged conspiracy.
The Division had never revoked an amnesty granted under its 1993 Corporate Leniency Policy, and the unprecedented action against Stolt-Nielsen prompted the company to file a lawsuit to enjoin prosecutors from indicting the company. In January 2005, a judge granted the injunction, holding that Stolt-Nielsen did not breach the amnesty agreement. Specifically, the court said the terms of the amnesty agreement—which was drafted by the DOJ—made no reference to any specific timeline.
Earlier this year, a two-judge panel of the Third Circuit vacated the district court’s injunction. (The third judge on the original panel was Samuel Alito, who was elevated to the Supreme Court before the case was decided.) Without reaching the merits of the district court’s decision, the panel held that Article III courts had no authority to second-guess an exercise of “prosecutorial discretion,” even when it involved a contractual promise not to indict. The panel said Stolt-Nielsen could only seek relief in a post-indictment motion to dismiss, even though the point of the amnesty agreement was to avoid indictment altogether.
The Supreme Court declined to reinstate the injunction while considering Stolt-Nielsen’s petition for certiorari, and the DOJ indicted the company and two of its former executives. (The justices later rejected the cert petition.)
Stolt-Nielsen’s motion to dismiss, filed last month, essentially repeats the conclusions of the district court in the pre-indictment litigation: Stolt-Nielsen did not, as a matter of law, breach the amnesty agreement, and the DOJ received the benefit of its bargain with the company, namely incriminating evidence against Stolt-Nielsen and its alleged co-conspirators.
Even if Stolt-Nielsen wins its motion to dismiss, that decision could be appealed to the Third Circuit and the Supreme Court. More than four years have elapsed since the DOJ’s investigation began. That could be six or seven years before any actual trial might begin (assuming Stolt-Nielsen doesn’t plea bargain if it ultimately loses the motion to dismiss.) Even if the amnesty agreement is ultimately upheld, Stolt-Nielsen has already lost the benefit that it bargained for—an agreement to avoid indictment. Prosecutors have already reaped their reward in the form of guilty pleas from the co-conspirators.
Beyond this case, the Third Circuit’s decision establishes the precedent that a signed agreement not to indict between the DOJ and a potential defendant is judicially unenforceable. Going forward, it will be interesting to see how corporate defense counsel alter their approach in seeking amnesty for their clients. One notable detail in this case is that Stolt-Nielsen’s original counsel, a former head of the Antitrust Division, approached the DOJ about amnesty before he’d bothered to conduct an internal investigation to determine whether his client actually broke the law. Perhaps that’s routine, but when the Division touts its amnesty policy as encouraging a “race to the prosecutor,” defense lawyers should take a step back and realize they represent their clients and not the DOJ.
For comprehensive coverage of the Stolt-Nielsen case, please visit StoltAntitrust.info, a website I established through the Voluntary Trade Council.
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