Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-14-17502/USCOURTS-ca9-14-17502-0/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

IN RE: OPTICAL DISK DRIVE

ANTITRUST LITIGATION,

DELL INC.; DELL PRODUCTS, L.P.;

HEWLETT-PACKARD COMPANY;

INGRAM MICRO, INC.; SYNNEX

CORPORATION; ACER AMERICA

CORP.; GATEWAY, INC.; GATEWAY

U.S. RETAIL, INC., FKA eMachines,

Inc.; STATE OF FLORIDA, Office of

the Attorney General, Department of

Legal Affairs; AARON WAGNER;

CHRIS JOHNSON; EVAN JACOBSON;

LISA MELEGARI; BARNEY

GOODMAN, JR.; BENJAMIN MURRAY;

THOMAS STENGER; JAMES ITOADLER; SANDRA STEFFEN; ALEX

BISSEN; BENJAMIN FABER;

MATTHEW HOSKING; CINDY BOOZE;

MATTHEW ENCE; EVAN RAVENELLE;

MICHAEL REILLY; SUSIE LIM;

ANGELA PRITCHARD; MIKE BISHOP;

KIMBERLY WOOD; BENJAMIN

PORTER; GAIL MURPHY; JOHN

MCKEE, on behalf of themselves and

all others similarly situated; JLK

SYSTEMS GROUP, INC.; JEFF KOZIK;

MEIJER, INC.; MEIJER DISTRIBUTION,

INC.; PAUL NORDINE; SENECA DATA

No. 14-17502

D.C. No.

3:10-md-02143-

RS

OPINION

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2 IN RE: OPTICAL DISK DRIVE ANTITRUST LITIG.

DISTRIBUTORS, INC.; GREGORY

STARRETT; ASHLEY TREMBLAY, on

behalf of themselves and all others

similarly situated,

Plaintiffs-Appellees,

v.

TOSHIBA SAMSUNG STORAGE

TECHNOLOGY CORP. KOREA, as

Liaison Counsel for Defendants, et

al.,

Defendants,

and

JOHN DOE 1,

Appellant.

Appeal from the United States District Court

for the Northern District of California

Richard Seeborg, District Judge, Presiding

Argued and Submitted

July 6, 2015—San Francisco, California

Filed September 10, 2015

Before: Richard C. Tallman, Milan D. Smith, Jr.,

and Mary H. Murguia, Circuit Judges.

Opinion by Judge Milan D. Smith, Jr.

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IN RE: OPTICAL DISK DRIVE ANTITRUST LITIG. 3

SUMMARY*

Discovery / Subpoenas

The panel affirmed the district court’s denial of a motion

to quash a civil subpoena to the Department of Justice,

Antitrust Division, from plaintiffs in an antitrust suit against

optical disk drive manufacturers.

The subpoena sought tape recordings and transcripts of

conversationsthat included the movant, “John Doe,” who was

not a party to the antitrust suit. The FBI made these secret

recordings two months before the grand jury issued a

subpoena to Doe during a criminal investigation that preceded

the antitrust suit. Doe was an employee of one of the

companies being investigated.

The panel held that the tape recordings were not protected

by Federal Rule of Criminal Procedure 6(e) because they

were not “matters occurring before the grand jury.” The

panel declined to follow other circuits and adopt the “effect

test,” which requires a factual inquiry, on a document-bydocument basis, to determine whether disclosure of a

particular requested item will reveal some aspect of the inner

workings of the grand jury. In addition, Doe offered no

evidence showing that the disclosure of the tape recordings

would compromise the integrity of the grand jury’s

deliberative process.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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COUNSEL

Sean F. O’Shea (argued) and Daniel M. Hibshoosh, O’Shea

Partners LLP, New York, New York, for Interested NonParty Appellant.

Jeff D. Friedman (argued) and Shana E. Scarlett, Hagens

Berman Sobol Shapiro LLP, Berkeley, California; Steve W.

Berman, Hagens Berman Sobol Shapiro LLP, Seattle,

Washington; Guido Saveri, R. Alexander Saveri, and Cadio

Zirpoli, Saveri & Saveri, Inc., San Francisco, California; Lee

Gordon, Hagens Berman Sobol Shapiro LLP, Pasadena,

California, for Indirect and Direct Purchaser PlaintiffsAppellees.

Michael P. Kenny, Debra D. Bernstein, Rodney J. Ganske,

and Andrew J. Tuck, Alston & Bird LLP, Atlanta, Georgia;

James M. Wagstaffe, Kerr & Wagstaffe LLP, San Francisco,

California,forPlaintffs-Appellees Dell Inc. and Dell Products

L.P.

Daniel A. Sasse, Crowell & Moring LLP, Irvine, California;

Beatrice B. Nguyen, Crowell & Moring LLP, San Francisco,

California, for Plaintiffs-Appellees Hewlett-Packard

Company, Ingram Micro Inc., and Synnex Corporation.

David B. Esau, Carlton Fields Jorden Burt, West Palm Beach,

Florida, for Plaintiffs-Appellees Acer America Corp.,

Gateway, Inc., and Gateway U.S. Retail, Inc., FKA

eMachines, Inc.

Daniel M. Wall, Belinda S. Lee, and Brendan A. McShane,

Latham & Watkins LLP, San Francisco, California, for

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IN RE: OPTICAL DISK DRIVE ANTITRUST LITIG. 5

Defendant Toshiba Samsung Storage Technology Korea

Corporation.

Lizabeth A. Brady, Nicholas J. Weilharnmer, and R. Scott

Palmer, State of Florida, Office of the Attorney General,

Department of Legal Affairs, Tallahassee, Florida, for

Plaintiff-Appellee State of Florida.

Christopher Ries, United States Department of Justice,

Antitrust Division, San Francisco, California; Ila C. Deiss,

United States Attorney’s Office, San Francisco, California,

for Non-Party United States Department of Justice, Antitrust

Division.

OPINION

M. SMITH, Circuit Judge:

Interested Non-Party John Doe 1 (Doe) appeals from the

district court’s order denying his motion to quash a subpoena

from Plaintiffs-Appellees Dell, Inc., et al. (Dell Plaintiffs)1to

the Department of Justice, Antitrust Division (DOJ). As part

of a criminal antitrust investigation into the optical disc drive

industry,

2

the FBI made secret tape recordings and transcripts

of conversations among various individuals, including Doe,

an employee of one of the companies being investigated. 

Doe, who was initially designated as a subject of the grand

jury investigation hearing for the potential antitrust case, was

1 The plaintiffs in this case include Direct Purchaser Plaintiffs (DPPS),

Indirect Purchaser Plaintiffs (IPPs) and Direct Action Plaintiffs (DAPs).

 

2

 The antitrust investigation is not the subject of this appeal.

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not indicted. After the grand jury investigation concluded

with corporate pleas and a settlement, the Dell Plaintiffs, in

a collateral civil antitrust suit against certain optical disk

drive manufacturers, subpoenaed the DOJ seeking

“recordings of conversations” and “verbatim transcripts”

relating to the DOJ’s investigation of those manufacturers. 

The FBI had made the tape recordings two months before the

grand jury issued its subpoena to Doe seeking his testimony. 

Doe moved to quash the subsequent civil subpoena pursuant

to Federal Rule of Criminal Procedure 6(e), which prohibits

disclosure of “a matter occurring before the grand jury.” Fed.

R. Crim. P. 6(e). Doe argued that no protective order would

protect his interest in not having his identity and the content

of those tapes revealed. The district court denied Doe’s

motion, concluding that Rule 6(e) did not apply because the

recordings at issue are not “a matter occurring before the

grand jury” within the definition of material protected by the

rule. We agree, and hold that the tape recordings at issue in

this case are not “matters occurring before the grand jury,”

and, therefore, are not protected by Rule 6(e). Doe contends

erroneously that the district court abused its discretion by

failing to apply the “effect test,” which requires the court to

“make a factual inquiry on a document-by-document basis”

to determine “whether disclosure of a particular requested

item will reveal some secret aspect of the inner workings of

the grand jury.” United States v. Dynavac, Inc., 6 F.3d 1407,

1413 (9th Cir. 1993). We did not adopt the “effect test” in

Dynavac, and we decline to do so now. Moreover, Doe has

offered no evidence showing that the disclosure of the tape

recordings would compromise “the integrity of the grand

jury’s deliberative process.” Id. at 1414.

We affirm the decision of the district court.

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FACTUAL AND PROCEDURAL BACKGROUND

The Dell Plaintiffs served a subpoena on the DOJ

requesting the production of secret tape recordings and

transcripts of conversations that were part of an earlier,

completed DOJ criminal antitrust investigation into the

optical disc drive industry. As required by the “Touhy

regulations,”3the DOJ objected to the subpoena on a variety

of grounds, including “to the extent it demands information

that would violate the grand jury secrecy rule of Rule 6(e) of

the Federal Rules of Criminal Procedure.” However,

following negotiations, the DOJ agreed to produce the tapes

to the Dell Plaintiffs under the terms of a protective order. 

Doe, who is not a party to the civil suit, intervened and sought

to quash the subpoena that requested recordings and

transcripts of conversations to which Doe was a party. Doe

argued that the subpoena “must be quashed because it

purports to require the production of secret recordings of []

Doe that, irrespective of their specific contents, would

seriously harm and possibly destroy his personal and

professional reputation, and quite possibly deprive him of his

livelihood.”

Acting under an order of reference from the district court,

the magistrate judge disagreed, and denied Doe’s motion to

quash, but issued an order stating that “the materials at issue

(recordings) shall not be produced until an appropriate

3

“[I]n determining whether production or disclosure should be made

pursuant to a demand,” DOJ officials “should consider” “[w]hether such

disclosure is appropriate under the rules of procedure governing the case

or matter in which the demand arose,” and “[w]hether disclosure is

appropriate under the relevant substantive law concerning privilege.”

28 C.F.R. § 16.26(a)(1)–(2) (also known as the “Touhy regulations.”).

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supplemental stipulated protective order is signed.” The

magistrate judge rejected the argument “that just because an

agent goes out and gets some evidence in an investigation, . . .

it’s grand jury material,” concluding that Rule 6(e) did not

apply to the subpoenaed material.

The district court affirmed the magistrate judge’s

decision, noting that “[a] district court will modify a

magistrate judge’s ruling on a non-dispositive matter only if

the order is ‘clearly erroneous’ or ‘contrary to law.’” Order

Overruling Objections to Nondispositive Pretrial Order of

Magistrate Judge Re Production of Recorded Conversations,

In Re Optical Disk Drive Antitrust Litigation, No. 3:10-md2143 RS, at 1 (N.D. Ca. December 19, 2014) (citation

omitted). The court focused on “what constitutes ‘grand jury

materials’ in the first instance,” identifying as the key

component, “matters occurring before the grand jury(.)” Id.

at 2 (quoting Sec. & Exch. Comm’n v. Dresser Indus., Inc.,

628 F.2d 1368, 1382 (D.C. Cir. 1980)). The court held that

“the record does not support a conclusion that the recordings

in dispute constitute ‘matters occurring before the grand jury’

within the meaning of this rule” because “while it might be

reasonable to assume that some or all of the recordings were

presented to the grand jury, nothing in the subpoena seeks to

discover what the grand jury actually did or did not have

before it.” The court further noted that “[p]roduction of all

material responsive to the subpoena likewise would not

establish that any or all of those materials were ever

presented to the grand jury, much less shed light on its inner

workings.” See Dynavac, 6 F.3d at 1411–12. While the

district court did not explicitly apply the “effect test,” it did

apply some of the “principles” of that test to the factual

record before it, focusing on whether releasing the recordings

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would reveal “some secret aspect of the grand jury’s

investigation.”

Doe filed this timely appeal.

JURISDICTION AND STANDARD OF REVIEW

We have jurisdiction over this appeal pursuant to Perlman

v. United States, 247 U.S. 7, 13 (1918). “The Perlman rule

has been formulated as providing a right of immediate appeal

by a party aggrieved by a district court discovery order

whenever the order requires a third party to produce evidence

or documents and that third party cannot be expected to go

into contempt merely to create a final appealable order.” In

re Nat’l Mortg. Equity Corp. Mortgage Pool Certificates

Litig., 857 F.2d 1238, 1240 (9th Cir. 1988). The district

court’s order in this case does not compel Doe to produce

evidence, but the Perlman doctrine has been applied to

situations like this one where a third party (e.g., Doe) must

rely on another third party (e.g., the DOJ) to protect his

interests in the discovery process. See In re Grand Jury

Subpoenas Dated Dec. 10, 1987, 926 F.2d 847, 854 (9th Cir.

1991) (“Doe Three must rely on Doe Four to protect his

interests. Doe Four, however, elected to comply with the

subpoenas. The only way to assure Doe Three that his

interests will be protected is to allow him to take an

immediate appeal from the order denying his motion to quash

the subpoenas.”).

We will overturn the district court’s denial of a motion to

reconsider the magistrate judge’s pretrial discovery order

only if the denial was “clearly erroneous or contrary to law.” 

Osband v. Woodford, 290 F.3d 1036, 1041 (9th Cir. 2002)

(quoting 28 U.S.C. § 636(b)(1)(A)). Applying this standard,

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“a reviewing court must ask whether, ‘on the entire

evidence,’ it is ‘left with the definite and firm conviction that

a mistake has been committed.’” Easley v. Cromartie,

532 U.S. 234, 242 (2001) (quoting United States v. United

States Gypsum Co., 333 U.S. 364, 395 (1948)).

DISCUSSION

Doe contends that the district court abused its discretion

by (1) failing to apply the “effect test” to determine whether

the recordings were protected grand jury materials;

(2) making unsupported factual findings about the

circumstances underlying the creation and use of these

recordings; and (3) abandoning its “supervisory role” under

the Federal Rules of Criminal Procedure, and deferring to the

DOJ’s ultimate decision, “which has previously, and since,

been contradicted by its own written statements,” to produce

the recordings called for by the subpoena. We disagree.

The district court’s denial of Doe’s motion to reconsider

the magistrate judge’s pretrial discovery order was not

“clearly erroneous or contrary to law.” Federal Rule of

Criminal Procedure 6(e)(2)(B) prohibits “an attorney for the

government” from “disclos[ing] a matter occurring before the

grand jury.” Doe argues erroneously that to determine what

constitutes a “matter occurring before the grand jury,” the

district court should have applied the “controlling legal

standard—the “effect test,” which “determines whether

disclosure of a particular requested item will reveal some

secret aspect of the inner workings of the grand jury.” 

Dynavac, 6 F.3d at 1413 (citing In re Grand Jury Matter

(Catania), 682 F.2d 61, 63 (3d Cir. 1982)). Doe further notes

that “the district court applied an exception to Rule 6(e)

allowing production of pre-existing documents created

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IN RE: OPTICAL DISK DRIVE ANTITRUST LITIG. 11

independently of the grand jury process.” We have never

adopted the “effect test,” and we decline to do so now. We

acknowledge, however, as does Doe, that the pre-existing

documents exception shares at least one characteristic of the

“effect test” by focusing on whether “the integrity of the

grand jury’s deliberative process would . . . be compromised

by . . . disclos[ing]” the pre-existing documents as a factor

relevant to determining whether Rule 6(e) applies. Dynavac,

6 F.3d at 1414.

In Dynavac, we identified “[v]arious different tests [that]

have been utilized by other circuits,” including the “effect

test” adopted by the Third, Fourth, Seventh, Eighth, Tenth,

and D.C. Circuits. Id. at 1412. We noted that “[i]n its

strength lies its weakness . . . because . . . its application

requires considerable judicial time and resources, and the ad

hoc nature of the test limits the value of precedent for both

litigants and courts.” Id. at 1413. We never adopted the

“effect test,” concluding instead that the grand jury’s

deliberative process in that case would not be compromised

by the disclosure of business records that predated the grand

jury investigation. Id. at 1414. Said differently, Dynavac

does not require application of the “effect test,” but it

suggests that some of the considerations inherent in the

“effect test” may be relevant to deciding whether the

protections of Rule 6(e) apply to documents that pre-date a

grand jury investigation.

While the “long-established policy of nondisclosure” in

part “act[s] as a shield for those who are exonerated by the

grand jury,” the fundamental purpose of Rule 6(e) is

“only to protect against disclosure of what is

said or takes place in the grand jury room . . .

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it is not the purpose of the Rule to foreclose

from all future revelation to proper authorities

the same information or documents which

were presented to the grand jury.” United

States v. Interstate Dress Carriers, Inc.,

280 F.2d 52, 54 (2d Cir. 1960). Thus, if a

document is sought for its own sake rather

than to learn what took place before the grand

jury, and if its disclosure will not compromise

the integrity of the grand jury process, Rule

6(e) does not prohibit its release.

Dynavac, 6 F.3d at 1411–12 (alteration in original). The

subpoena at issue here seeks only to discover “recordings of

conversations in which a present or former officer, director or

employee of Defendant PLDS was one of the participants,”

not what took place before the grand jury. Indeed, as the

district court noted, “Production of all material responsive to

the subpoena . . . would not establish that any or all of those

materials were ever presented to the grand jury, much less

shed light on its inner workings.” Because we have not

adopted the “effect test” in our circuit, the district court

properly focused its attention on the language of Rule 6(e),

“the factual record” before it, and Dynavac’s emphasis on

protecting the disclosure of grand jury processes.

Next, Doe argues that the district court made unsupported

factual findings about the circumstances underlying the

creation and use of the recordings. Doe contends that the

district court erred in relying “on a narrow set of cases

finding Rule 6(e) inapplicable to the production of preexisting documents, which happened to have been shown to

a grand jury.” As an initial matter, we note that Doe’s

argument is premised on the faultyassertion, discussed supra,

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that “despite finding an exception for pre-existing documents,

those cases still hold that the required inquiry is the effect

test.” In addition, Doe argues that “it is undisputed that the

subpoenaed recordings were created for the grand jury

investigation by a DOJ witness acting under the FBI’s

supervision,” and that “these facts are a far cry from cases

which permit the disclosure of pre-existing business records

and other materials. . . .” We disagree.

The mere fact that the subpoenaed recordings were

created as part of a criminal investigation using a cooperating

witness acting under the FBI’s supervision does not

automatically trigger Rule 6(e) protection. “[M]atters

occurring before the grand jury” could conceivably include

“information obtained by a government official who, in

pursuing an investigation that is not truly independent of the

grand jury’s inquiry, has become an agent of the grand jury.”

United States v. Flemmi, 233 F. Supp.2d 113, 115 (D. Mass.

2000); see also In re Grand Jury Subpoena, 103 F.3d 234,

238 (2d Cir. 1996). But that is not what occurred here.

The consensually recorded telephone conversation was

authorized and occurred two months before the grand jury

ever issued a subpoena in June 2009. It is even theoretically

possible that a grand jury might never have been empaneled. 

As our sister circuits have recognized, “information

developed by the FBI, although perhaps developed with an

eye toward ultimate use in a grand jury proceeding, exists

apart from and was developed independently of grand jury

processes.” Catania, 682 F.2d at 64; see also In re Grand

Jury Investigation, 630 F.2d 996, 1000 (3d Cir. 1980) (“The

mere fact that a particular document is reviewed by a grand

jury does not convert it into a ‘matter occurring before the

grand jury’ within the meaning of Rule 6(e).”); Sec. & Exch.

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Comm’n v. Dresser Indus., Inc., 628 F.2d 1368, 1382 (D.C.

Cir. 1980) (“[W]hen testimony or data is sought for its own

sake for its intrinsic value in furtherance of a lawful

investigation rather than to learn what took place before the

grand jury, it is not a valid defense to disclosure that the same

information was revealed to a grand jury.”).

Rule 6(e)’s protections apply to a narrower set of

materials than Doe suggests; indeed, “it is not the purpose of

the Rule to foreclose from all future revelation to proper

authorities the same information or documents which were

presented to the grand jury.” Dynavac, 6 F.3d at 1411

(quoting Dress Carriers, Inc., 280 F.2d at 54). Doe has not

demonstrated that the tape recordings and transcripts were a

product of the grand jury’s investigation, much less that their

revelation would compromise the integrity of the grand jury’s

deliberative process. See id. at 1414.

Finally, Doe characterizes “[t]he district court’s deference

to DOJ’s agreement to produce these materials” as “egregious

given DOJ’s own written statements making clear the privacy

interests and applicability of Rule 6(e) to the subpoenaed

materials.” The district court properlyexercised its discretion

in concluding that the DOJ’s initial objections to the

subpoena, expressed in a letter, were not dispositive. The

DOJ objected to the subpoena “to the extent it demands

information that would violate the grand jury secrecy rule of

Rule 6(e)[.]” The DOJ subsequently negotiated with the Dell

Plaintiffs and “made clear . . . that it would not negotiate or

discuss anything that was grand jury material.” The parties

then “reached an agreement on the general terms of

production of the recordings and transcripts.” The district

court did not abuse its discretion in concluding that Rule 6(e)

was not implicated by the production of the tape recordings

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pursuant to a negotiated protective order in which Doe’s

counsel was invited to participate.

CONCLUSION

We affirm the decision of the district court denying Doe’s

motion to quash the subpoena. The pending motion is denied

as moot.

Each party shall bear its own costs on appeal.

AFFIRMED.

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