In Re MICRON TECHNOLOGY, INC. SECURITIES LITIGATION

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
)
In re MICRON TECHNOLOGY, INC. ) Case No. 09-mc-00609 (GK)
SECURITIES LITIGATION )
)
)
)
______________________________)
MEMORANDUM OPINION
Plaintiffs International Union of Operating Engineers, Local
132 Pension Plan, and Chemical Valley Pension Fund of West Virginia
bring this Motion to Compel under Federal Rule of Civil Procedure
45(c)(2)(B)(i) against the United States Department of Justice
(“DOJ" or “Government”) and Attorney General Eric J. Holder, Jr.
Plaintiffs seek the production of documents responsive to two
subpoenas duces tecum issued on September 2, 2009 and September 4,
2009 in the underlying federal securities fraud action, In re
Micron Technology, Inc. Securities Litigation, No. CV-06-085-BLW,
filed in the District of Idaho. Upon consideration of the Motion,
Opposition, Reply, and the entire record herein, and for the
reasons set forth below, the Motion to Compel is denied.
I. Procedural Background
The present Motion to Compel arises out of a pending federal
securities class action in the District Court for the District of
Idaho against Micron Technology, Inc. and three of its senior
officers (“Idaho litigation”). The defendants in that action are
alleged to have engaged in a massive price-fixing conspiracy
between 1999 and 2002 which involved the issuance of false and
misleading statements to Micron’s investors. Mot. to Compel at 2.
In October 2002, Micron entered into a leniency program with DOJ's
Antitrust Division, which had been investigating the price-fixing
conspiracy for some time. Micron admitted to a criminal violation
of the Sherman Antitrust Act and agreed to cooperate with the
investigation in exchange for amnesty from prosecution. The three
senior Micron officers named as defendants in the Idaho litigation
accordingly testified under immunity about their involvement in the
price-fixing scheme, and several other Micron employees were
interviewed as well.
In the present Motion to Compel, Plaintiffs seek all records
of interviews of Micron employees in connection with the DOJ’s
investigation for use in the Idaho litigation. Id. at 9.
Plaintiffs first attempted to secure the production of these
records from the defendants in the Idaho litigation, but have come
to understand that they do not have copies of the records in their
possession. Id. at 7. Next, Plaintiffs contacted counsel for Gary
Swanson, an executive of Hynix Semiconductor who was indicted in
the Northern District of California on related charges of
price-fixing in 2008, because the DOJ had released all of the
records in question to Mr. Swanson’s counsel during his trial.
However, Mr. Swanson’s counsel informed Plaintiffs that the copies
-2-
of the records he had received were subject to a protective order,
and that he had returned all copies to the DOJ. Plaintiffs finally
issued two subpoenas duces tecum--one to the Office of Legal
Counsel, DOJ and one to the Attorney General--to obtain the records
of interviews on September 2, 2009 and September 4, 2009.
On November 6, 2009, Assistant Attorney General Christine
Varney informed Plaintiffs’ counsel that the DOJ would not
authorize production of the requested documents, citing the
Department’s Touhy regulations, 28 C.F.R. §§ 16.21-.29. In light
of the approaching deadline for discovery in the Idaho litigation,
Plaintiffs filed the present Motion to Compel in this Court
pursuant to Fed. R. Civ. P. 45(c)(2)(B)(i).
On January 6, 2010, the Court informed the parties that, due
to its busy schedule, it would be able to issue a decision but not
a memorandum order before the close of discovery in the Idaho
litigation on January 22, 2010. The Court denied the Motion to
Compel by minute order dated January 14, 2010. In response to
Plaintiffs’ request that the Court issue a Memorandum Order setting
forth the basis for the January 14, 2010 Minute Order, the Court
gave notice on January 26, 2010 that it would issue this Memorandum
Order. Order (Jan. 26, 2010) [Dkt. No. 15].
II. Standard of Review
Fed. R. .Civ. P. 45 governs the issuance of subpoenas and,
relatedly, motions to compel. Fed. R. Civ. P. 45 (2010). This is
-3-
true even when the object of the subpoena is a federal agency.
Watts v. Sec. Exchange Comm., 482 F.3d 501, 508 (D.C. Cir. 2007)
(explaining that “a challenge to an agency’s refusal to comply with
a Rule 45 subpoena should proceed and be treated not as an APA
action but as a Rule 45 motion to compel”).
Rule 45(c)(2)(B)(i) provides that a person commanded to
produce documents may object to the subpoena, but that the serving
party may then move the Court for an order compelling production.
When a motion to compel is filed, Fed. R. Civ. P. 45 “requires that
district courts quash subpoenas that call for privileged matter or
would cause an undue burden.” Watts, 482 F.3d at 509. The burden
lies on the party resisting discovery to show that the documents
requested are either unduly burdensome or privileged. See
Alexander v. Fed. Bureau of Investigation, 192 F.R.D. 42, 46
(D.D.C. 2000).
III. Analysis
The DOJ first argues that production of the records sought by
Plaintiffs would be unduly burdensome, both because Plaintiffs’
request is duplicative and cumulative and because production would
place a considerable burden on the agency. The DOJ next argues
that the records are subject to the federal law enforcement
privilege.1
1
The DOJ also argues that the records contain attorney
work-product, and so are subject to the attorney work-product
(continued...)
-4-
A. Plaintiffs’ Request Is Unduly Burdensome
The DOJ objects to the subpoenas on the grounds that
production of the interview memoranda would be unduly burdensome.
The “undue burden” test requires district courts to be “generally
sensitive” to the costs imposed on third parties by subpoenas duces
tecum. Watts, 482 F.3d at 509. Fed. R. Civ. P. 26(b)(2)(C)
further requires the court to limit discovery where “(i) the
discovery sought is unreasonably cumulative or duplicative, or can
be obtained from some other source that is more convenient, less
burdensome, or less expensive; (ii) the party seeking discovery has
had ample opportunity to obtain the information by discovery in the
action; or (iii) the burden or expense of the proposed discovery
outweighs its likely benefit, considering the needs of the case,
the amount in controversy, the parties’ resources, the importance
of the issues at stake in the action, and the importance of the
discovery in resolving the issues.” Fed. R. Civ. P. 26(b)(2)(C)
(2010).
The Government argues that Plaintiffs “already have in their
possession the exact information they seek to obtain from the
interview memoranda,” namely that Micron, as well as defendants
Sadler and Appleton, have admitted to criminal violations of
1
(...continued)
privilege. Because this Court agrees that the federal law
enforcement privilege applies to the materials sought by
Plaintiffs, the question of whether the attorney work-product
privilege applies as well is not reached.
-5-
antitrust laws. Opp’n at 16, 21. Yet, in the very same brief, the
Government also argues that the materials Plaintiffs seek are
confidential precisely because only a very narrow portion of them
have been released or disclosed. Id. at 9 (“[T]here is a
substantial amount of information contained in the Micron interview
memoranda which has not been publicly disclosed.”). In fact,
Plaintiffs have attempted--and failed--to obtain the complete
records of interviews through discovery of other parties.
While it might be true that what information is currently
available to Plaintiffs establishes the basic fact that Micron
admitted to criminal antitrust law violations, it is not for the
Government to limit Plaintiffs’ case in this way. Indeed, as
Plaintiffs point out, one of the central reasons they seek the
records of interviews is to support their claim of scienter and
claims for damages. Reply at 1. Thus, the information sought is
not entirely cumulative or duplicative, and is of central
importance to Plaintiffs’ case.
However, the DOJ also argues that Plaintiffs could simply
depose the individuals interviewed by the Antitrust Division.
Plaintiffs do not disagree, although they contend that Micron
employees “are unlikely to be as forthcoming” with their own
counsel as they were when interviewed by the DOJ. Mot. to Compel
at 12. Further, the DOJ interviews were taken more than six years
ago, and witnesses’ memories have likely faded. Given these
-6-
circumstances, the Court is not convinced that Plaintiffs could
obtain the same information by deposing those witnesses whose
identities are known.
The remaining question, then, is whether the burden placed on
the DOJ in producing these documents outweighs their value.
Because the documents have been identified, as the Government
concedes, there is no burden involved in searching for them.
Instead, the Government argues that a substantial burden would
result from a “threat to the integrity of the leniency program, and
because the government would become a de facto party to the
plaintiffs’ underlying litigation to protect against unwarranted
disclosure.” Opp’n at 22.
As discussed further below, these are significant concerns
that justify a finding of undue burden. Still, even when the
demand for subpoenaed material is unduly burdensome, the Court is
authorized to impose reasonable conditions and restrictions with
respect to the subpoenaed material’s production. Fed. Trade Comm.
v. Invention Submission Corp., 965 F.2d 1086, 1090 (D.C. Cir.
1992). Plaintiffs have given little guidance on what conditions or
restrictions would be found acceptable, and the DOJ has indicated
a general opposition to a protective order. See Opp’n at 17-18.
In any event, the Court’s conclusion that the law enforcement
privilege applies to the subpoenaed material defeats any interest
-7-
in finding reasonable conditions and restrictions for its
production.
B. The Federal Law Enforcement Privilege Applies
The DOJ next asserts the federal law enforcement privilege, a
qualified privilege “designed to prevent disclosure of information
that would be contrary to the public interest in the effective
functioning of law enforcement.” Tuite v. Henry, 181 F.R.D. 175,
176 (D.D.C. 1998).
In Tuite, the Court of Appeals listed ten factors to be
considered in determining whether the law enforcement privilege
favors maintaining the confidentiality of materials sought in
discovery. These factors, which are not exhaustive, include: “(1)
the extent to which disclosure will thwart governmental processes
by discouraging citizens from giving the government information;
(2) the impact upon persons who have given information of having
their identities disclosed; (3) the degree to which governmental
self-evaluation and consequent program improvement will be chilled
by disclosure; (4) whether the information sought is factual data
or evaluative summary; (5) whether the party seeking discovery is
an actual or potential defendant in any criminal proceeding either
pending or reasonably likely to follow from the incident in
question; (6) whether the investigation has been completed; (7)
whether any interdepartmental disciplinary proceedings have arisen
or may arise from the investigation; (8) whether the plaintiff’s
-8-
suit is nonfrivolous and brought in good faith; (9) whether the
information sought is available through other discovery or from
other sources; and (10) the importance of the information sought to
the plaintiff’s case.” Id. at 177.
As has been discussed, factors eight (whether the plaintiff’s
suit is nonfrivolous and brought in good faith), nine (whether the
information sought is available through other discovery or from
other sources), and ten (the importance of the information sought
to the plaintiff’s case) weigh in favor of Plaintiffs. The
information sought does not appear to be available through other
discovery, but is important to Plaintiffs’ case, which is
nonfrivolous and brought in good faith. The remaining relevant
factors,2 however, weigh heavily in favor of recognizing the
privilege here.
With regards to the first factor (the extent to which
disclosure will thwart governmental processes by discouraging
citizens from giving the government information), it is readily
apparent that a refusal to recognize the law enforcement privilege
for information obtained through the DOJ Antitrust Division’s
leniency program would chill future informants from coming forward.
2
Neither Plaintiffs nor the DOJ relied on factors three
(the degree to which governmental self-evaluation and consequent
program improvement will be chilled by disclosure), five (whether
the party seeking discovery is an actual or potential defendant in
any criminal proceeding), or seven (whether any interdepartmental
disciplinary proceedings have arisen or may arise from the
investigation) in their briefs.
-9-
The Antitrust Division’s investigations depend heavily on the
willingness of insiders to voluntarily provide information. Such
information is, of course, given in great part as a result of the
DOJ’s assurance of confidentiality. Decl. of Scott D. Hammond at
¶¶ 9-16 [Dkt. No. 9-3]. When confidential information is disclosed
to criminal defendants at trial, it is virtually always through a
protective order that--as Plaintiffs themselves are aware--prevents
broad disclosure of the information. If insiders like the
defendants in the Idaho litigation were put on notice that any
information they give could be subpoenaed and used against them in
a civil suit for damages, then the Antitrust Division’s
investigative capacity would surely suffer.
Although this conclusion alone might justify recognizing the
privilege here, factors two (the impact on confidential
informants), four (whether the information is factual or evaluative
data), and six (whether the investigation is closed) also support
application of the privilege. First, the identities of several
Micron employees who cooperated with the Government were never
disclosed, and other undisclosed information could “reveal personal
background information, the identities of unindicted coconspirators
and individuals only peripherally involved or completely uninvolved
in the price-fixing conspiracy.” Decl. of Niall E. Lynch ¶¶ 12-14
(“Lynch Decl.”) [Dkt. No. 9-4]. Second, the records sought are not
verbatim transcripts of interviews, which would be factual in
-10-
nature, but rather summaries of those interviews prepared by DOJ
paralegals that could “reveal the investigators’ interviewing
techniques and evaluative process, as well as what the
investigators found to be significant.” Tuite, 181 F.R.D. at 180.
Thus, factors two and four also weigh against disclosure. Finally,
the DOJ’s investigation has not concluded, as there is one
indictment outstanding for a foreign national for his participation
in the price-fixing conspiracy. Lynch Decl. ¶ 5.
The Court thus agrees with the DOJ that “the government’s
disclosure of its investigative memoranda will strongly damage the
integrity of the Division’s leniency program, current open
investigations, and the ability to pursue investigations in the
future.” Opp’n at 17. Given the strong public interest in
maintaining the confidentiality of the information sought by
Plaintiffs, the law enforcement privilege applies.
Plaintiffs respond that the privilege has been waived because
the DOJ released all material sought to Mr. Swanson’s counsel in
the course of his criminal trial. However, as the above discussion
makes clear, the law enforcement privilege is subject to a fact-
specific balancing test in each case. While the Tuit factors may
call for disclosure in a criminal trial--if, somehow, the Jencks
Act, 18 U.S.C. § 3500, did not already require disclosure--the same
need not be true in a civil suit for damages. See, e.g., In re
Sealed Case, 856 F.2d 268 (D.C. Cir. 1988) (for purposes of law
-11-
enforcement privilege, “[t]he public interest in nondisclosure must
be balanced against the need of a particular litigant for access to
the privileged information”) (emphasis added); Bigelow v. District
of Columbia, 122 F.R.D. 111, 114-15 (D.D.C. 1998) (recognizing that
government’s disclosure of information under protective order to
private party in civil suit did not waive law enforcement privilege
with respect to intervenor because “[t]he fact that the Government
sought to protect the public’s interest in nondisclosure, but,
nonetheless, recognized the plaintiffs [sic] need for this
information and voluntarily agreed to disclosure . . . should not
inure to the detriment of the Government”). Thus, the Court
concludes that the DOJ has not waived the federal law enforcement
privilege.
IV. CONCLUSION
For the reasons set forth above, Plaintiffs’ Motion to Compel
is denied.
/s/
February 1, 2010 Gladys Kessler
United States District Judge
Copies to: attorneys on record via ECF
-12-