The “Yates Memo,” authored by then-Deputy Attorney General Sally Yates, is an effort to fundamentally change the way a company and outside counsel approach enforcement matters. It puts great effort on transparency, cooperation, and doing it the government way, rather than the historical approach of representing and protecting the company in investigations in return for potential reduction of penalties.
Although prosecuting individuals responsible for criminal antitrust violations has been longstanding U.S. Department of Justice (DOJ) policy, the DOJ’s tools and practices for investigating and prosecuting both individuals and corporations suspected of criminal antitrust violations have evolved. In particular, the DOJ’s focus on individuals increasingly early in investigations poses challenges that counsel must manage proactively.
Yates Memo Overview
The DOJ declared its focus on prosecuting individuals responsible for corporate misconduct in the September 9, 2015 “Individual Accountability for Corporate Wrongdoing” memorandum. The “Yates Memo” recognized that individual accountability “deters future illegal activity, it incentivizes change in corporate behavior, it ensures that the proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.”
The Yates Memo identified six steps to further these objectives:
- Requiring corporations seeking cooperation credit to provide all relevant facts relating to responsible individuals;
- Focusing on individuals from the inception of the investigation;
- Coordination between criminal and civil DOJ attorneys;
- Not releasing culpable individuals from civil or criminal liability when resolving a matter with a corporation, absent extraordinary circumstances;
- Having a plan to address individuals before resolving matters with a corporation; and
- Holding individuals liable for civil liability.
CALL-OUT: The early focus on individuals poses risk, which counsel can mitigate through clear policies and robust training.
Be Prepared The DOJ will often serve subpoenas on individuals who are either suspected of wrongdoing or who hold key positions in a company under investigation. Such service may occur outside the office, including at employees’ homes and DOJ attorneys will often attempt to conduct informal interviews if the employees are willing to talk.
Because these visits are unannounced and may arise without any sign an investigation is afoot, employees may be caught off-guard and agree to answer questions without a company lawyer present. Therefore, it is essential that employees understand the importance of having counsel present during such conversations and that it is both appropriate and prudent to refuse to answer questions without having first consulted with counsel.
Clear policies and robust training programs can help ensure employees are fully knowledgeable of these considerations and understand the importance of conferring with counsel before talking with government attorneys or investigators.
There is also a trend toward using individual subpoenas to reach documents that may be outside the possession, custody, and control of the company. These can range from text messages on an individual’s cell phone to emails in a personal account. Such evidence can be particularly significant in cartel cases, in which informal communications between competitors can be very important. Individual subpoenas are also useful tools for the government to seek documents that are within the possession of a former employee.
It is important that employees understand that text messages and personal emails are not a “safe harbor” beyond the reach of the government, but, instead, are likely to be subject to the same collection and production methods as other types of documents. Emails pose significant issues in cartel cases, in which informal or sloppy language can suggest the existence of an illegal conspiracy, even where no such conspiracy exists. This problem is even more acute in the case of text messages.
In many circumstances, separate counsel for individuals under investigation or who may be key witnesses in the investigation will be necessary and appropriate. The government may, in some instances, specifically recommend that individual employees have their own counsel or question company counsel whether they can proceed with ensuring that employees are represented by separate counsel.
Even if there is no apparent conflict of interest between the company and the individual, it is important to thoroughly investigate the possibility of a conflict and retain separate counsel for the individual in the event a possible conflict is identified. The process of identifying and retaining such counsel, as well as bringing them up to speed, can create delays in an internal investigation or responding to a government subpoena.
Additional Cross-Border Considerations
Although the considerations identified above have equal force for companies and individuals located inside or outside the United States, there are further considerations for companies based outside the U.S. or companies who employ persons outside the U.S.
In particular, current and former employees residing abroad may refuse to travel to the U.S. to face interviews, whether conducted by DOJ or company lawyers. This can hinder an internal investigation or make it more difficult for a company to receive cooperation credit.
Similarly, individuals residing abroad may be unable or unwilling to produce documents responsive to either an individual or company subpoena. Depending on the documents sought, these individuals could be precluded from producing documents under foreign states’ data privacy laws, putting them in the difficult position of being unable to comply with a U.S. subpoena and foreign law.
The primary impact of the Yates Memo on antitrust enforcement has been to accelerate the DOJ’s focus on individual employees, including efforts to secure their documents or testimony early in the investigation process.
This accelerated timetable is best managed through an active antitrust compliance program that ensures employees understand company policies and lays the groundwork for an effective response to an investigation, should the DOJ commence one.
Furthermore, the DOJ’s strategies typically require companies under investigation to make important strategic choices very soon after subpoenas are served, including whether to seek leniency, whether to obtain separate counsel for employees, and whether to cooperate with specific requests of the DOJ. This further underscores the need for both inside and outside counsel to work together and learn as much about the underlying facts as quickly as possible.
About the Authors
Matthew Siembieda is a Pittsburgh-based attorney at Reed Smith with more than 30 years of experience handling complex commercial litigation matters, including class actions, as well as advising global companies on international compliance issues.
Ed Duffy is a Houston-based attorney in Reed Smith’s Global Regulatory Enforcement Group, who focuses on antitrust counseling and litigation and a wide range of complex commercial disputes.