Your company is the subject of a federal criminal investigation, civil agency enforcement proceedings and private civil litigation, all arising out of the same alleged conduct. Assuming that the company does not intend to contest the government actions at least, how do you resolve these matters as effectively and efficiently as possible with minimal damage to the organization? There are numerous considerations that must be made when looking toward resolution; some of the more significant and frequently-encountered considerations vis-à-vis other proceedings are discussed herein.
Considerations for resolving a criminal investigation
Conversely, resolving a criminal case without consideration for other agency proceedings may ultimately result in higher penalties and fines than if the proceedings are resolved in coordination with each other and a multiple-hit to the company as each agency exacts its full enforcement authority without regard to the enforcement efforts of the other agencies. Also, resolving a criminal case before civil proceedings may result in agreed factual findings that can be used against the company in both regulatory proceedings and private litigation. The criminal findings will be considered conclusively resolved due to the higher burden of proof in a criminal case, and are difficult to collaterally challenge in civil proceedings. The company may not have a choice as to which matter is resolved first, but it is generally preferable to resolve a criminal case before regulatory or civil proceedings.
An additional consideration relating to a criminal investigation is to be conscientious of with whom the company shares information and documents. Often, agencies share gathered information and documents between themselves and with foreign criminal enforcement authorities—either formally or informally—within the limits of the grand jury secrecy requirements of Federal Rule of Criminal Procedure 6(e). Further, voluntarily sharing information or documents with a government agency can waive otherwise applicable privileges in parallel proceedings, as most federal courts have held that even non-waiver letters are ineffective to prevent waiver, and it is Department of Justice policy not to sign onto or otherwise agree to such letters.
Considerations for resolving private civil litigation
There are issues surrounding the resolution of private civil litigation for both the company and investigating criminal and regulatory authorities. From the perspective of the company, any factual matter or materials discovered in the civil litigation could be brought within the purview of the criminal investigation via statements the company makes or materials it produces can be obtained by government authorities and used against the company. Thus, ensuring that government proceedings are resolved in advance of the conduct of private civil litigation is important to protect the company from suffering increased government scrutiny from often wide-ranging discovery in the private litigation resulting from a more liberal discovery standard in that context than in a criminal investigation.