A defendant in a fraud case in D.C. federal court wants the Justice Department to turn over documents it acquired from a company that entered into a deferred prosecution agreement with the government, but the company is trying to block the request on the ground that the documents are confidential and cannot be used in the criminal case.
Lawyers for the opposing sides squared off today in the U.S. Court of Appeals for the D.C. Circuit, where a three-judge panel was confronted with a dispute that pits the enforceability of a nonwaiver agreement (between a private company and the government) against rights held by a criminal defendant. The court has not spoken on the issue, Judge Judith Rogers said from the bench.
As part of a federal probe into the California energy crisis, Williams Co., based in Oklahoma, entered a deferred prosecution agreement with the Justice Department in 2006. The company turned over documents—notes of witness interviews conducted by Williams’ counsel, analysis of Williams’ natural gas trading positions, and reports on Williams’ internal investigations. Williams officials admitted its traders reported false data to a monthly gas market journal called “IFERC.” Williams agreed to pay a $50 million penalty, court records show.
In 2006, Scott Thompson, a Williams employee, was indicted in D.C. federal court on a wire fraud charge. Prosecutors allege that Thompson, a financial trader, conspired with others in D.C. and elsewhere to manipulate and attempt to control the price of natural gas. Thompson is accused of providing false trading data—including prices and volumes—to try to influence the published index price of natural gas.
Thompson’s lawyer, Crowell & Moring partner Philip Inglima, sought all the documents Williams Co. voluntarily turned over to Justice, arguing that Williams Co. waived attorney-client privilege and work-product rights. Government lawyers in the trial court argued against the discovery request, citing the agreement with Williams Co. The company is not a party in the criminal case but is a defendant in civil litigation in California stemming from the energy crisis of 2000 and 2001. “Thompson has a right to try his case,” Inglima, co-chair of the firm's white collar and securities litigation group, said in court today. “Williams has no privilege in the materials it provided” to the Justice Department.
U.S. District Judge Richard Leon said at a hearing last July that the “public policy interest weighs in favor, strongly in favor of the defendant” in obtaining the Williams Co. documents from the government in order to prepare a defense. Leon last year ordered Justice to turn over the documents to Thompson’s lawyers. Counsel for Williams Co. moved to stay the order and appealed it to the D.C. Circuit.
Gibson, Dunn & Crutcher partner Andrew Tulumello, representing Williams Co., argued today that the documents the company turned over cannot be used in the prosecution of Thompson. The documents were for the use of the Justice Department investigation of Williams Co., the lawyer argued, and not for the prosecution of criminal defendants.
“Our concern is enforcing the agreement we had with the Justice Department,” Tulumello, vice-chair of the firm's class action and complex litigation practice group, said today. “We don’t want anybody to see (the documents). If there is a privilege, the privilege holds.” Tulumello said Williams Co. is worried the documents would be used in the civil litigation in California.
DOJ’s Sangita Rao of the Criminal Division’s Appellate Section argued today that a protective order could be used in the case. Rao said the government cannot waive its obligations under rules of criminal procedure through an agreement with a private company. “Any such agreement would be unenforceable,” Rao said.
Much of today’s argument, which lasted more than an hour, was spent on whether Williams Co. even had standing to interject itself into the criminal case and the extent to which the documents are relevant to the criminal case. Circuit Judges Laurence Silberman, Judith Rogers, and Stephen Williams actively questioned the lawyers for the opposing sides. Silberman declared it is clear the company has standing stemming from the company’s alleged injury-in-fact.
The judges collectively appeared to want more information about Leon’s order to determine the extent to which the documents are material to Thompson’s defense. Thompson’s lawyer, Inglima, argued the documents are valuable because they were in part the foundation of the indictment lodged against his client.