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March 20, 2013

Air Cargo Plaintiffs Not Entitled to Grand Jury Testimony of Two Witnesses

By Jeffrey May, J.D.

The testimony of two witnesses before federal grand juries investigating the air cargo industry should not be disclosed to attorneys for plaintiffs in multi-district litigation stemming from the Justice Department's price fixing probe, the federal district court in Brooklyn, New York, has decided. The requirements for disclosure of the grand jury testimony were not met. Thus, objections of the two witnesses and two airlines to a magistrate judge's October 24, 2012, order to disclose excerpts of the 2010 grand jury testimony of the two witnesses were sustained (In re Air Cargo Shipping Services Antitrust Litigation, March 19, 2013, Gleeson, J.).

The underlying action was brought by direct and indirect purchasers of air-freight shipping services against domestic and foreign airlines that provide such services. The plaintiffs alleged that defendants engaged in a global conspiracy to fix the prices of air-freight shipping services from 2000 to 2006.

Shortly after the two grand jury witnesses were deposed in the private litigation, the plaintiffs sought the disclosure of excerpts of the grand jury transcripts to impeach or refresh the recollections of these witnesses. The federal district courts in California and Georgia—where the witnesses testified before the grand juries—transferred the transcripts to the federal district court in Brooklyn. Magistrate Judge Pohorelsky ordered disclosure of certain excerpts of the grand jury transcripts after concluding that these portions "may well serve to refresh the witnesses' recollection or to impeach them." The witnesses and airlines objected.

The magistrate judge's order misconstrued the standard for disclosing grand jury materials by requiring only "a showing that the information is needed to avoid a possible injustice," the court ruled. The magistrate judge's failure to weigh plaintiffs' particularized need for grand jury testimony against the need for continuing grand jury secrecy was contrary to law.

In deciding whether to disclose grand jury testimony, a judge needed to consider the potential risk of retaliation against the grand jury witnesses, as well as the risk that future grand jury witnesses might be deterred from freely testifying if they know that the information might be released. The magistrate judge might have blunted the risks of retaliation and of deterring future grand jury witnesses by limiting the scope of disclosure. However, disclosing the grand jury testimony might subject both individuals to retribution and social stigma within the industry in which they still worked. Moreover, disclosure might deter those who might come forward and aid the grand jury in the future.

Another critical secrecy-related interest that the court considered in its decision to deny disclosure was the need to protect the identity and reputation of the innocent. Excerpts of the testimony might identify and implicate a number of co-workers and competitors. Further, the disclosure of the grand jury testimony might "tarnish" the reputation of the two witnesses by suggesting that they themselves were targets of the Justice Department's investigation.

Lastly, the court explained that the party seeking disclosure had the burden of demonstrating that "'a particularized need' exists for the minutes which outweighs the policy of secrecy." However, the plaintiffs failed to demonstrate a need for disclosure that outweighed the interest in secrecy, "[g]iven plaintiffs' access to an abundance of readily available information." The plaintiffs could rely on the more than 12 million pages of documents produced by the defendants, as well as the deposition testimony of the two grand jury witnesses and other witnesses, to refresh the recollection or impeach the credibility of these two witnesses at trial, in the court's view.

The case is No. 06-MD-1775 (JG) (VVP) (MDL No. 1775).

Besrat J. Gebrewold (Cohen Milstein Sellers Toll PLLC) for one or more plaintiffs. Gary A. MacDonald (Skadden, Arps, Slate, Meagher & Flom LLP) for one or more defendants.

MainStory: TopStory Antitrust NewYorkNews

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