In re Air Cargo Shipping Servs. Antitrust Litig.

Decision Date19 March 2013
Docket NumberMDL No. 1775.,No. 06–MD–1775 (JG)(VVP).,06–MD–1775 (JG)(VVP).
Citation931 F.Supp.2d 458
PartiesIn re: AIR CARGO SHIPPING SERVICES ANTITRUST LITIGATION.
CourtU.S. District Court — Eastern District of New York

OPINION TEXT STARTS HERE

MEMORANDUM AND ORDER

JOHN GLEESON, District Judge:

On October 24, 2012 Magistrate Judge Viktor Pohorelsky issued a Memorandum Order directing the disclosure of portions of grand jury testimony by John Doe and James Doe, witnesses before federal grand juries in California and Georgia, respectively, which were investigating price-fixing in the air cargo industry. ECF No. 1764. On November 30, 2012 John Doe, James Doe, and defendants Airline 1 and Airline 2 filed objections to Magistrate Judge Pohorelsky's Order pursuant to Rule 72(a) of the Federal Rules of Civil Procedure (Fed. R. Civ. P.) and 28 U.S.C. § 636(b)(1)(A). ECF Nos. 1782, 1783, 1792. I heard oral argument on the objections on January 4, 2013. For the reasons stated below, the objections to Magistrate Judge Pohorelsky's Order are sustained.

BACKGROUND

Since 2006 the Antitrust Division of the United States Department of Justice (“DOJ”) has been investigating price-fixing in the air transportation industry. As part of that investigation, John Doe testified before a grand jury sitting in the Central District of California on March 4, 2010, and James Doe testified before a grand jury sitting in the Northern District of Georgia on March 16, 2010. DOJ Ex Parte Mem. 2, ECF No. 1748.

This multi-district litigation stems from the part of DOJ's investigation that relates to price-fixing in the air cargo industry. The facts of this litigation have been set forth more fully in several prior opinions of the Court, familiarity with which is assumed. See, e.g., In re Air Cargo Shipping Services Antitrust Litigation, No. 06–md–1775, 2010 WL 4916723 (E.D.N.Y. Nov. 24, 2010). Defendants are domestic and foreign airlines that provide airfreight shipping services around the world. Plaintiffs are direct and indirect domestic and foreign purchasers of these airfreight shipping services. Plaintiffs allege that defendants engaged in a global conspiracy to fix the prices of airfreight shipping services from 2000 to 2006.

Plaintiffs deposed John Doe on April 27, 2011 and James Doe on June 2, 2011. ECF No. 1742–1, Exs. 2 (John Doe Dep. Tr.), 4 (James Doe Dep. Tr.). The depositions of John Doe and James Doe both revealed that each had previously testified before a grand jury investigating price-fixing in the air cargo industry. Id. Ex. 2 91:18–91:19 (John Doe Dep. Tr.); Ex. 4 11:17–19:22 (James Doe Dep. Tr.).

On August 8, 2011 plaintiffs petitioned the United States District Court for the Central District of California and the United States District Court for the Northern District of Georgia to transfer the grand jury transcripts of John Doe and James Doe to this Court, or, in the alternative, to disclose the transcripts in their entirety pursuant to Rules 6(e)(3)(E)(i), 6(e)(3)(F), and 6(e)(3)(G) of the Federal Rules of Criminal Procedure (Fed. R. Crim. P.). Pls. Resp. Objections 5, ECF No. 1787. In support of their petitions, plaintiffs argued that disclosure of the transcripts was necessary to impeach or refresh the recollections of John Doe and James Doe. DOJ Ex Parte Mem. 3. DOJ submitted memoranda to both courts opposing the disclosure of the transcripts, but it did not oppose transfer of the transcripts to this Court. Id. Both courts granted plaintiffs' petitions to transfer the grand jury transcripts to this Court. DOJ Ex Parte Mem. 3; see also ECF No. 1724–1, Ex. 9 (N.D. Ga. Order); ECF No. 1727–3, Ex. 1 (C.D. Cal. Order).

Thereafter, on June 8, 2012 plaintiffs and DOJ filed a joint motion for disclosure of limited excerpts of the grand jury transcripts of John Doe and James Doe. Joint Mot., ECF No. 1704. As set forth in the joint motion, DOJ compared the deposition testimony of John Doe and James Doe with their prior grand jury testimony and concluded “that limited disclosure of excerpts of the grand jury transcripts is appropriate for the purpose of allowing plaintiffs to refresh the recollection or impeachment of witnesses, as permitted under Douglas Oil. 1Id. at 2 (emphasis in original). In the joint motion, DOJ further requested leave to file “an ex parte and in camera memorandum under seal that describes in detail the limited portions of the grand jury transcript meriting disclosure,” which Magistrate Judge Pohorelsky granted. Id.; Order, Aug. 20, 2012; see DOJ Ex Parte Mem. Magistrate Judge Pohorelsky heard oral argument on the joint motion on September 5, 2012. Order, June 19, 2012, ECF No. 1715.

On October 24, 2012, 2012 WL 5989756, Magistrate Judge Pohorelsky issued a Memorandum Order granting the joint motion. In the Order, Magistrate Judge Pohorelsky noted that he had independently reviewed the excerpts of the grand jury transcripts identified by DOJ and compared them with the deposition testimony of John Doe and James Doe. Mem. Order 2. He held that a portion of the grand jury transcripts identified by DOJ “may well serve to refresh the witnesses' recollection or to impeach them.” Id. Magistrate Judge Pohorelsky specifically “reject[ed] the assertion that there must be a ‘compelling interest’ for the information,” finding instead that “all that is required is a showing that the information ‘is needed to avoid a possible injustice.’ Id. (quoting Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211, 222, 99 S.Ct. 1667, 60 L.Ed.2d 156 (1979)). He concluded that [g]iven the limited volume of the grand jury testimony at issue and the fact that the government is not asserting that continued grand jury secrecy should trump the plaintiffs' need for that testimony, the court is satisfied that all aspects of the Douglas Oil test are met and that disclosure is therefore warranted ....” Id.

Magistrate Judge Pohorelsky further ordered immediate disclosure of the excerpts of the grand jury transcripts, rather than “on the eve of trial.” Id. at 2–3. He reasoned that [g]iven that no trial date has been set, and none is likely to be set for an extended period of time, it is not at all clear whether the witnesses will be available to testify at trial or be subject to the subpoena power of the court when the trial is held” and that “the very question of whether the witnesses should be called to testify at trial could be affected by the plaintiffs' assessment of the grand jury testimony that is disclosed.” Id. Finally, he directed that disclosure of the testimony be “limited to ‘attorneys' eyes only,’ to protect the witnesses from retaliation within the industry where they apparently remain employed.” Id. at 3.

DISCUSSION

A. Standard of Review

In considering a timely objection to a magistrate judge's ruling on a nondispositive pretrial matter, I must “modify or set aside any part of the order that is clearly erroneous or is contrary to law.” Fed.R.Civ.P. 72(a); 28 U.S.C. § 636(b)(1)(A). A factual finding is “clearly erroneous” when the reviewing court “on the entire evidence ... is left with the definite and firm conviction that a mistake has been committed.” Easley v. Cromartie, 532 U.S. 234, 242, 121 S.Ct. 1452, 149 L.Ed.2d 430 (2001) (quoting United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)). An order is contrary to law “when it fails to apply or misapplies relevant statutes, case law, or rules of procedure.” DeFazio v. Wallis, 459 F.Supp.2d 159, 162–63 (E.D.N.Y.2006) (citation and internal quotation marks omitted).

B. Analysis1. The Douglas Oil Standard for Disclosing Grand Jury Material under Fed.R.Crim.P. 6(e)

The grand jury occupies such a cherished position “as an instrument of justice in our system of criminal law ... that it is enshrined in the Constitution.” United States v. Sells Engineering, Inc., 463 U.S. 418, 423, 103 S.Ct. 3133, 77 L.Ed.2d 743 (1983) (citing Pittsburgh Plate Glass Co. v. United States, 360 U.S. 395, 399, 79 S.Ct. 1237, 3 L.Ed.2d 1323 (1959); Costello v. United States, 350 U.S. 359, 361–62, 76 S.Ct. 406, 100 L.Ed. 397 (1956)). The Founding Fathers considered “the grand jury so essential to basic liberties that they provided in the Fifth Amendment that federal prosecution for serious crimes can only be instituted by ‘a presentment or indictment of a Grand jury.’ United States v. Calandra, 414 U.S. 338, 343, 94 S.Ct. 613, 38 L.Ed.2d 561 (1974). Today, the grand jury continues to serve “the dual function of determining if there is probable cause to believe that a crime has been committed and of protecting citizens against unfounded criminal prosecutions.” Sells Engineering, 463 U.S. at 423, 103 S.Ct. 3133 (quoting Branzburg v. Hayes, 408 U.S. 665, 686–87, 92 S.Ct. 2646, 33 L.Ed.2d 626 (1972)).

The Supreme Court has consistently recognized “that the proper functioning of our grand jury system depends upon the secrecy of grand jury proceedings.” Douglas Oil Co., 441 U.S. at 218–19, 99 S.Ct. 1667;United States v. Procter & Gamble Co., 356 U.S. 677, 681, 78 S.Ct. 983, 2 L.Ed.2d 1077 (1958) ( [W]e start with a long-established policy that maintains the secrecy of the grand jury proceedings in the federal courts.”). This policy, which is “older than our Nation itself,” Pittsburgh Plate Glass Co., 360 U.S. at 399, 79 S.Ct. 1237, serves several distinct interests:

First, if preindictment proceedings were made public, many prospective witnesses would be hesitant to come forward voluntarily, knowing that those against whom they testify would be aware of that testimony. Moreover, witnesses who appeared before the grand jury would be less likely to testify fully and frankly, as they would be open to retribution as well as to inducements. There also would be the risk that those about to be indicted would flee, or would try to influence individual grand jurors to vote against indictment. Finally, by preserving the secrecy of the proceedings, we assure that persons who are accused but exonerated by the grand...

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