Source: http://www.justice.gov/atr/cases/f4300/4337.htm
Timestamp: 2013-05-22 08:40:49
Document Index: 126642181

Matched Legal Cases: ['§ 1311', '§ 1313', '§ 2', '§ 18', '§ 1', '§ 1311', '§1312', '§\n1313', '§ 1313', '§1313', '§1313', '§1313', '§ 1313', '§ 2', '§ 18', '§ 1', '§ 1', '§ 1311', '§ 12']

Memorandum Of The United States In Support Of Its Opposition To Defendants` Motion To Compel Documents Responsive To American`s First And Second Requests For Documents : U.S. v. AMR Corporation, American Airlines, Inc., and AMR Eagle Holding Corporation This document is available in two
FOR THE DISTRICT OF KANSAS UNITED STATES OF AMERICA, Plaintiff,
v. AMR CORPORATION, AMERICAN AIRLINES, INC., and AMR EAGLE HOLDING CORPORATION
| Civil Action No.: 99-1180-JTM MEMORANDUM OF THE UNITED STATES IN SUPPORT
DOCUMENTS RESPONSIVE TO AMERICAN'S FIRST AND
SECOND REQUESTS FOR DOCUMENTS
We oppose American's motion because it would require us to violate the Antitrust Civil
Process Act, to violate an order entered by the United States District Court of the Eastern District of
Michigan, and also to divulge to American confidential materials that Plaintiff has obtained from
American's competitors in connection with its on-going law enforcement investigations involving
suspected anticompetitive conduct of other air carriers in hubs other than DFW -- the only hub at issue
in this case. American seeks disclosure of two general categories of documents. First, American seeks
documents obtained by the United States pursuant to Civil Investigative Demand ("CID") in connection
with its investigations of other carriers in the domestic airline industry. To support its claim for these
documents, American argues erroneously that the United States has failed to produce to American the
one category of documents that all parties agree should be produced to American: all documents
obtained by the United States during its investigation into American's suspected predatory conduct (the
"American predation investigation"). American's claims for the documents from investigations of
carriers other than American fail for the following reasons:
The Antitrust Civil Process Act, 15 U.S.C. §§ 1311, et seq. (the "Act"), forbids the
United States from making information obtained pursuant to the Act (i.e., pursuant to
CID) available for examination by American except in limited circumstances. See 15
U.S.C. § 1313(c); United States v. American Telephone & Telegraph Co., 86
F.R.D. 603, 647-48 (D.D.C. 1979) ("AT&T").
Consistent with AT&T and Division policy, the United States has produced to
American all of the materials that it obtained in connection with its investigation of
American's predatory conduct at DFW, including materials that it obtained pursuant to
CID. To the extent that the United States uses (as that term is defined in AT&T) in this case
any documents or information that it has obtained pursuant to the Act while investigating potential predatory conduct by other carriers at hubs other than DFW, it
either has already produced such documents and information to American or will
continue to produce as such use of the documents is made. The United States has properly asserted the law enforcement investigatory files
privilege with respect to documents and information that it has obtained during ongoing
investigation of potential predatory conduct by other carriers at hubs other than DFW. Second, American contends that the United States should have disclosed to American
documents obtained from American's competitors in discovery in the United States v. Northwest
Airlines Corp. and Continental Airlines, Inc. ("NW/CO") action, pending in the United States District
Court for the Eastern District of Michigan. While American may be able to obtain such documents
from their owners (and the United States would not object), American's attempt to obtain these
documents by this motion must be rejected because:
NW/CO is an action that was filed on October 23, 1998 to challenge Northwest
Airlines Corp.'s ("Northwest") purchase of a controlling interest in Continental Airlines,
Inc. ("Continental"). The Complaint against Northwest and Continental was filed in the
United States District Court for the Eastern District of Michigan and does not include
any claims alleging violation of Section 2 of Sherman Act, 15 U.S.C. § 2; rather,
NW/CO involves an alleged violation of Section 7 of the Clayton Act (15 U.S.C. § 18)
and Section 1 of the Sherman Act (15 U.S.C. § 1).
NW/CO was brought under a different statutory provision than the statutory provision
involved in this case because the conduct challenged in the two cases is very different. NW/CO challenges an agreement between Northwest and Continental to combine their
ownership, which the United States alleges would result in harm to competition. NW/CO does not involve any allegations of predatory conduct by either Northwest or
Continental, nor does it involve a claim of monopolization or attempted monopolization
of a hub by either Northwest or Continental. (Conrath Decl., Ex. 1).
The Protective Order entered by Judge Hood in NW/CO prohibits the United States
from disclosing Confidential or Highly Confidential materials produced in discovery in
that case outside of NW/CO except "to employees of the Executive Branch outside of
the Department of Justice." NW/CO Protective Order, ¶ 2. (Conrath Decl., Ex. 2)
Where the United States has used documents from NW/CO discovery, as the NW/CO
Protective Order permits it to do, it has subpoenaed those documents in this case so
that American can also have those documents. American has already received six of
seven such documents.
In short, the United States has produced to American all of the responsive, non-privileged
documents and information in its possession that it is legally empowered to produce. Moreover, the
United States has taken steps to make information that it is not legally empowered to produce available
to American in this case through the issuance of subpoenas for the information in this case. Plaintiff is
simply not required to violate a federal statute and an Order of another District Court, especially when
it has taken steps to ensure that American's legitimate discovery demands are met. American's Motion
Plaintiff Has Produced All Responsive, Non-privileged Materials Pertaining to
Its Investigation of American's Predatory Conduct at DFW
The requests contained in American's Second Set of Document Requests are so broad that
they implicate virtually every document the United States has ever obtained, whether or not relevant to
this case, in connection with any law enforcement investigation that it has conducted in the domestic
airline industry. For context, therefore, we explain briefly the general nature of the United States' law
enforcement activities in the domestic airline industry.
The Division is charged with conducting law enforcement investigations into suspected
anticompetitive conduct in a variety of industries, including the domestic airline industry. American has
been involved, either as a subject or a third party participant, in several such investigations over the
years, as have other domestic air carriers. These investigations have ranged in subject matter from the
suspected monopolistic conduct of a particular domestic air carrier (as is alleged against American in
this case) to suspected anticompetitive combinations (either by alliance or merger or otherwise) of
domestic air carriers (as is alleged in the NW/CO case) to other types of suspected anticompetitive
conduct in a variety of geographic markets by a variety of different domestic air carriers. If an
investigation reveals that law enforcement action against anticompetitive conduct is warranted, the
Assistant Attorney General in charge of the Division may make the decision to file a lawsuit.
The Division's monopolization investigations are typically focused on conduct by a particular air
carrier in particular geographic markets. The investigation into American's suspected predatory
conduct, for example, examined American's conduct at American's Dallas/Ft. Worth hub. As a
general rule, therefore, documents and information obtained in investigations involving the conduct of
other carriers in other hubs are not relevant to this case. To be sure, the Division's different
investigations into the domestic airline industry may touch on similar questions relating to the structure of
markets in the domestic airline industry, but they do not involve common legal issues except in the
limited sense that they all involve airlines.
Most of the documents and information that the Division receives during the course of a civil
investigation are produced in response to a Civil Investigative Demand ("CID") issued pursuant to the
Antitrust Civil Process Act, 15 U.S.C. § 1311 et seq. (the "Act"). Material produced in response to a
CID can include documents, interrogatory answers and transcripts of oral testimony. 15 U.S.C.
§1312. All material produced in response to a CID is protected from disclosure by 15 U.S.C. §
1313(c), which prevents the Division from disclosing information obtained pursuant to a CID except in
limited circumstances. 15 U.S.C. § 1313(c) provides, in relevant part:
Except as otherwise provided in this section, while in the possession of the custodian,
no documentary material, answers to interrogatories, or transcripts of oral testimony, or copies thereof, so produced shall be available for examination, without the consent of the person who produced such material, answers, or transcripts, and in the case of any product of discovery produced pursuant to an express demand for such
material, of the person from whom the discovery was obtained, by any individual
other than a duly authorized official, employee, or agent of the Department of
Justice. (Emphasis supplied.)
The statutory protection for information obtained by the Division pursuant to CID is vital to not only the
protection of the confidential information produced by CID recipients, but also the ability of the Division
to perform its law enforcement duties. (Nannes Decl., ¶ 15.) As noted above, the Act allows disclosure of CID material in very limited circumstances, e.g.,
when the producing party consents or in response to a request by Congress. The Act also provides for
disclosure of CID materials in connection with litigation: Whenever any attorney of the Department of Justice has been designated to appear
before any court, grand jury, or Federal administrative agency in any case or
proceeding, the custodian of any documentary material, answers to interrogatories, or
transcripts of oral testimony may deliver to such attorney such material, answers or
transcripts for official use in connection with any such case, grand jury, or proceeding
as such attorney determines to be required. Upon the completion of any such case,
grand jury, or proceeding, such attorney shall return to the custodian any such material,
answers, or transcripts so delivered which have not passed into the control of such
court, grand jury, or agency through the introduction thereof into the record of such
15 U.S.C. §1313(d). The United States District Court for the District of Columbia addressed the
problem of reconciling "the confidentiality provision of §1313(c)(3) with the provision of §1313(d)(1)
authorizing the government to use CID material in a suit subsequent to the investigation that yielded the
CID material" in United States v. AT&T, 86 F.R.D. 603, 647-48 (D.C. 1980).(1) While noting that "a
literal reading of the two provisions admits of the construction that the Government could keep the
material in custody until the point in the trial when it is needed, and then simply offer the material in
evidence," the court determined that a "more just interpretation of the statute would require that the
privilege elapse not simply when the Government might offer CID material at trial, but at such earlier
point as would give defendants fair opportunity to study it and thus meet it at trial." Id. at 648. The
court rejected the notion that "all material collected by the Government would be discoverable, even if
the Government made no use of it . . . ;" the Court thus established the "use" standard that has been
followed by the United States in this case. Id.
In AT&T, the District Court found that, while "mere perusal" of protected material by the
government does not terminate the statutory protection against disclosure, direct "use" of the
documents in the pretrial stage terminates the protection and requires the government to produce both
the material it "used" and any "material that throws light on the material to be produced." Id. With
respect to the "direct use" standard, Judge Greene held that:
[f]or this purpose, 'direct use' means offering the material in evidence at trial, listing it in
a pretrial order as material to be introduced in evidence, showing it to a witness in
preparing the witness' testimony at a pretrial deposition or at trial, using it to impeach a
witness at pretrial deposition or at trial, formulating interrogatories, demands for
admission, or questions to be propounded at a deposition, or similar use.
Id. at 647. The Division has followed the AT&T decision in its production of CID materials in this
Thus, during the course of the law enforcement investigations conducted by the Division, the
Division may seek, typically pursuant to CID, production of highly sensitive, confidential business
information from both subjects of the investigations and third parties (usually competitors or customers). In order for the Division to continue to be in a position to obtain such information from such persons
without having to resort to enforcement of its CIDs by a Court, CID recipients must have confidence
that the confidential information that they provide the Division will be protected from disclosure to their
competitors, suppliers, or customers to the fullest extent possible under the law. Finally, the documents in the possession of the United States because it is currently investigating
possible predation by other domestic air carriers are also protected from disclosure by the law
enforcement investigatory files privilege. The law enforcement investigatory files privilege applies to
investigatory files compiled for law enforcement purposes and is intended to protect ongoing
investigative efforts. Black v. Sheraton Corp. of America, 564 F.2d 531 (D.C. Cir. 1977)(privilege
is based on harm to law enforcement efforts that might arise from public disclosure of investigatory
files); National Union Fire Insurance Co. of Pittsburgh, PA v. FDIC, 1995 WL 104835 (D. Kan.
1995) (privilege applied where potential interference with an ongoing investigation from disclosure of
documents outweighed plaintiff's interest in discovering them).(2) The policies behind this privilege, which
is vital to the ability of the Division to carry out its law enforcement mandate, reinforce the confidential
nature of CID material. Plaintiff Has Produced All Materials That It Obtained Pursuant To CID
In Connection With The Investigation Leading To The Filing Of This
Upon receipt of American's First Set of Document Requests, the United States identified CID
materials that it had received in connection with its investigation of American's predatory conduct at
DFW that led to the filing of this complaint. All such materials (interrogatories, documentary
materials and transcripts of CID depositions) were therefore produced to American in response
to its First Set of Document Requests. (French Decl., ¶ 5.)(3)
Plaintiff Has Followed AT&T And Produced All CID Materials That It
Has Obtained In Investigations Other Than The American Predation
Investigation Where It Has Used Such Materials In This Case
In response to American's Second Set of Document Requests, Plaintiff has also produced to
American all CID materials obtained by the United States in other ongoing investigations where the trial
staff in this case has made direct use of any of those materials in the pre-trial or trial stages of this
litigation.(4) These CID materials were produced because of a determination that they constituted
"related material held by the custodian that throws light on the material to be introduced." AT&T, 86
F.R.D. at 648. This determination is not, as American claims,(5) inconsistent with the position Plaintiff
has taken with respect to the documents at issue in this Motion.
American appears to be confused as to what Plaintiff has and has not produced. Thus,
American argues that Plaintiff produced 15 CIDs issued in connection with an ongoing predation
investigation of carriers other than American, but "in response to Request No. 26, which called for the
production of any documents produced in connection with those CID's, the DOJ produced nothing." (Opp. Memo., at 13-14 (emphasis supplied).) In fact, as Plaintiff has previously informed American,
Plaintiff has produced all of the materials obtained pursuant to the 15 CIDs that American references in
its Memorandum. (French Decl., ¶¶ 4-5.)(6) What Plaintiff has not produced, however, is copies of
three other CIDs issued to the subjects of the Division's ongoing investigation of possible predation by
two other carriers in other geographic markets and copies of the materials produced in response to
those CIDs.(7)
American argues that Plaintiff has artificially defined the "American predation investigation" so
as to avoid producing to American documents Plaintiff obtained pursuant to CID in connection with an
omnibus predatory conduct investigation that American believes exists. Whether the investigation into
predation in the airline industry is characterized as a single investigation or as separate investigations of
conduct by various air carriers in various markets, the fact remains that the United States based its suit
against American only on the evidence gathered in its investigation of American and not on evidence
gathered in its investigation of conduct by other airlines in other markets. As has been explained repeatedly to American,(8) the Division originally opened a preliminary
inquiry ("PI") solely to investigate American's conduct in city pairs emanating from DFW. The form
memorandum requesting PI authority identifies only American as a potential defendant and identifies as
the geographic markets to be investigated only city pair markets emanating from Dallas/Ft. Worth,
Texas. (Nannes Decl., ¶ 7.) When the Department later decided to investigate other carriers in
different geographic markets, "add-on" clearance was obtained from the Federal Trade Commission.(9) (Id. at ¶ 9.) The investigation of those other carriers have involved different hubs and different conduct,
than the investigation of American. (Conrath Decl., ¶ 9.)
Finally, we note that the materials obtained during the ongoing investigation of predatory
conduct by other carriers is of marginal, if any, relevance to this case. This case is not going to be
about conduct by other carriers at their hubs, but instead will be about American's conduct at its
Dallas/Ft. Worth hub. Nor does Plaintiff anticipate using in this case any of the information that the
Antitrust Division obtained in connection with its now closed investigation into travel agency overrides.(10) Whatever the merits of American's claims for production of these documents, their relevance to this
case is dubious at best.
American contends the United States, by its reference to fifty-three (53) depositions taken in
past investigations of the airline industry, conceded that the transcripts of such depositions should be
produced in this case. American obtained the number 53 from Appendix D to the government's Rule
26(a) Initial Disclosures. (French Decl., ¶ 5, Ex. 2.) In the Rule 26(f) conference, American insisted
that the United States search all investigatory files involving barriers to entry at any hub in preparing its
Rule 26(a) Initial Disclosures. The United States attempted to satisfy American's overbroad request by
disclosing persons and materials identified in searching files other than the predation investigation files
and noted its doubts as to the relevance of the persons and materials identified in those appendices to
this case.(11) That disclosure was neither an admission of relevance nor an admission that the transcripts
were used in connection with this action. All of the deposition transcripts listed in Appendix D of the United States Rule 26(a) Initial
Disclosures were of depositions taken pursuant to the CID statute. Eight of the depositions were taken
in connection with an investigation, closed in 1996, of whether Delta's acquisition of certain slots at
New York's La Guardia Airport was anticompetitive; and thirty-one were taken in connection with an
investigation, also closed in 1996, into whether agreements between travel agencies and certain air
carriers for paying market-share based commission overrides to the travel agents were unreasonable
restraints of trade. (French Decl., ¶ 9.) To the extent that those transcripts contained information
called for by the Court's February 7, 2000, order, that information has been produced. The remaining
depositions were taken in the Division's investigation of Northwest's purchase of a controlling interest
in Continental Airlines and are protected by both the CID statute and the NW/CO protective order. These depositions were not covered by the Court's February 7, 2000, order because the NW/CO
investigation was not a monopolization investigation. None of the fifty-three deposition transcripts
referenced by American have been used by the Division in connection with this case, except to the
extent that they were reviewed in order to comply with the Court's February 7, 2000, order. Id.
The Law Enforcement Investigatory Files Privilege Protects from
Disclosure Documents Contained In The Division's Open Investigative
Files Relating To Ongoing Investigation of Carriers Other than
The documents that American seeks from the Division's open investigative files relating to
possible predation by other carriers are not only protected from disclosure by 15 U.S.C. § 1313(c), as
discussed above, but also by the law enforcement investigatory files privilege.(12) The files of this open
investigation contain confidential business information of American's competitors, and reveal
information about the carriers that the Division is investigating. The files also contain internal
memoranda describing the status of those matters, the disclosure of which could prematurely reveal the
government's theories. In its response to Defendants' document requests 3, 4, 24, 25 and 26, the
government objected to the production of certain documents, and asserted the law enforcement
investigatory privilege.(13) (French Decl., Ex. 1)
Defendants argue, erroneously, that the government was required, at the time it first asserted
the privilege to defendants, to provide an affidavit from the agency head specifying the particular
information for which the privilege is asserted, and explaining why the privilege applies. The proper
time for the government to submit such an affidavit is when the matter is brought before the court, in this
case, by a motion to compel. Cf. In re Sealed Case, 121 F.3d 729, 741 (D.C. Cir. 1997)(White
House was not obliged to "formally invoke its [executive] privileges in advance of the motion to
compel;" the fact that it said, in response to a subpoena, that it "believed the withheld documents were
privileged," was sufficient; In re Consolidated Litigation Concerning International Harvester's
Disposition of Wisconsin Steel, 1987 WL 20408, at *7 (N.D. Ill. Nov. 20, 1987)(rejecting the
assertion that agency head's affidavit must be submitted when the privilege is first invoked); Abramson
v. United States, 39 Fed. Cl. 290, 294 n.3 (1997) ("procedural requirements generally are satisfied
through the production of a declaration or affidavit by the agency head . . . in response to a motion to
compel."); SEC v. Downe, 1994 WL 23141, *5 (S.D.N.Y. Jan. 27, 1994)(government meets its
obligation regarding affidavit by filing it with its opposition to motion to compel). Cases cited by defendants do not provide otherwise. In National Union Fire Insurance Co.
of Pittsburgh, PA v. FDIC, 1995 WL 104835 (D. Kan. 1995), the FDIC sought a protective order
against production of certain documents, claiming the law enforcement investigatory privilege. The
court found that the agency head's declaration was sufficient to assert the privilege. In Pontarelli
Limousine, Inc. v. City of Chicago, 652 F. Supp. 1428 (N.D. Ill 1987), the United States filed a
motion to quash two subpoenas, but did not provide the requisite detailed declaration from an agency
head. That case has no bearing on the instant case in which the United States has provided a detailed
declaration to the court. Tuite v. Henry, 98 F.3d 1411 (D.C. Cir. 1996), which defendants cite to
enumerate the factors the court must consider in determining the applicability of the privilege, is in fact
procedurally similar to this case. In that case, the Department of Justice filed its detailed declaration in
response to a motion to compel. According to the Tuite v. Henry court, Common sense and the purpose of the rule dictate that the "subject to" language of
Rule 45(c)(2)(B) does not mandate that the full description required by Rule 45 (d)(2)
be provided at the time the initial objection is asserted.
Id. at 1416. Defendants have now filed a motion asking this Court to compel production of all documents
relating to any of the Division's predation investigations, including its open and ongoing investigations.(14) The United States is therefore providing the Declarations of A. Douglas Melamed, Acting Assistant
Attorney General in charge of the Antitrust Division, and of John M. Nannes, Deputy Assistant
Attorney General, which describe the materials over which the privilege is asserted and explain why the
privilege applies. The attached declarations also explain how disclosure of information from the Division's open
investigative files relating to possible predation by carriers other than American with respect to hubs
other than DFW, particularly while still pending, could have an adverse effect on the progress of those
matters and on any future attempts by the Division to initiate litigation against the airlines under
investigation. The United States agrees with defendants that the Court should consider the following factors
when deciding whether to compel disclosure of material protected by the law enforcement investigatory
privilege: (1) the extent to which disclosure will thwart governmental processes by discouraging
citizens from giving the government information; (2) the impact upon persons who have
given information of having their identities disclosed; (3) the degree to which
governmental self-evaluation and consequent program improvement will be chilled by
disclosure; (4) whether the information sought is factual data or evaluative summary; (5)
whether the party seeking the discovery is an actual or potential defendant in any
criminal proceeding either pending or reasonably likely to follow from the incident in
question; (6) whether the --- investigation has been completed; (7) whether any
intradepartmental disciplinary proceedings have arisen or may arise from the
investigation; (8) whether the plaintiff's suit is non-frivolous and brought in good faith;
(9) whether the information sought is available through other discovery or from other
sources; and (10) the importance of the information sought to the [other side's] case.
National Union Fire Insurance of Pittsburgh v. FDIC, 1995 WL 104835 (D. Kan. 1995)
(Appendix, Ex. A)(quoting Everitt v. Brezzel, 750 F. Supp. 1063, 1066-67 (D. Colo. 1990).
The relevant factors can be balanced upon the following considerations. The Division is
continuing to investigate possible predation by air carriers other than American. As long as the Division
is continuing to investigate, disclosure of material from the investigative files could discourage potential
witnesses from coming forward with information. To the extent that the United States believed that the
balancing of the factors referenced above required disclosure of particular documents to American, it
has already disclosed those documents (e.g., the CIDs issued to low-cost carriers and all materials
submitted in response to those CIDs, where the United States has made or intends to make direct use
in this case of any CID materials produced by the particular low-cost carrier.) The fact that the United
States disclosed these documents without forcing American to file a motion to compel should not be
taken as a waiver of its right to assert the privilege as to any documents contained in its open
investigative files. See In re Sealed Case, 121 F.2d 729, 741 (D.C. Cir. 1997)(holding that release of
a particular document only waives governmental privileges as to the document and not all related
materials.) Under American's view, the law enforcement investigatory files privilege would essentially
terminate whenever the Division files a lawsuit in the same industry in which it continues to investigate
potential violations of the antitrust laws. Such an interpretation simply cannot be correct.	The United States has not produced documents addressed to or received from the subjects of
its ongoing predation investigation of other carriers, including CIDs issued to those subjects and
materials it received in response to CIDs. American's argument that the privilege should not apply
because "[t]he vast majority of documents the DOJ is withholding were produced by large corporations
who are already protected by the procedures set forth in the Protective Order entered by this Court,"
seems to be directed at this information. We know of no law that makes investigations involving "large
corporations" any less entitled to the protection afforded by the privilege than investigations involving
individuals or small corporations. Nor do we know of any law that renders application of the law
enforcement investigatory files privilege moot in the face of a Protective Order. Similarly, American's
claim that the privilege should not apply because it is seeking "purely factual material" ignores the fact
that the material it seeks was provided by subjects of an ongoing investigation in response to a process
which guarantees a high degree of confidentiality to the material provided. Production of CID materials
and related correspondence from an open investigation in this case could jeopardize the Division's
ability to provide the confidentiality assurances necessary to conduct future investigations in this
industry. While one of the government's rationales for refusing to disclose this information is based in
part on its recognition that premature disclosure could potentially prejudice the rights of those parties
under investigation, 40 Op. A.G. 45 (1941), the government's primary interest here is to protect its
on-going ability to conduct its law enforcement activities. Black v. Sheraton Corp., 564 F.2d 531,
541 (D.C. Cir. 1977)("law enforcement operations cannot be effective if conducted in full public view . . . .") Disclosure of information provided either voluntarily or in response to compulsory process by
parties to ongoing investigations could deter those parties from continuing to cooperate in our ongoing
investigations, and could frustrate future settlement negotiations. A major balancing factor is whether the information sought is available through other discovery
or from other sources. In this instance, the Court should consider the fact that American has issued
subpoenas to every major domestic air carrier. Those subpoenas request all documents provided by
each major carrier to the Department of Justice since January 1, 1994, "relating to alleged, actual, or
proposed conduct by any U.S. airline, . . . ." Carriers that received CIDs in connection with the
Division's ongoing investigations of their conduct at their hubs may choose to raise an objection to
American's subpoena to the extent that the request is overly broad and not reasonably calculated to
lead to the discovery of admissible evidence in this case (which involves American's conduct at DFW),
an objection which could not have been raised in response to a CID issued in an investigation involving
the CID recipient's conduct at its own hubs. Such discovery requests are the proper way to proceed. Upon balancing the potential harm to the Division's ongoing and future investigations against
American's need to obtain these documents from the Division's investigative files, American's motion to
compel should be denied.
The NW/CO Protective Order Precludes Plaintiff From Disclosing Documents From That Case To American Absent An Order Modifying the Protective Order
As set forth above, the NW/CO case was filed on October 23, 1998 to challenge Northwest's
purchase of a controlling interest in Continental. Unlike this case, NW/CO does not involve claims of
monopolization or attempted monopolization of a hub by either Northwest or Continental in violation of
Section 2 of the Sherman Act, 15 U.S.C. § 2, but instead was brought under Section 7 of the Clayton
Act, 15 U.S.C. § 18, and Section 1 of the Sherman Act, 15 U.S.C. § 1. (Conrath Decl., Ex. 1). The
subject matter of the NW/CO case and this case are thus completely unrelated.
Nonetheless, American presses for the documents that have been produced to the United
States through discovery in the NW/CO case.(15) The United States has no objection to American
obtaining these documents in any of several appropriate ways. American could subpoena the
documents directly from their owners.(16) Or American could seek the permission of the owners for the
United States to provide the documents to American.(17) Or American could seek to modify the
Protective Order that prevents the United States from turning over the documents.(18) The United
States' only objection is to American's demand that it turn over these documents in a way that violates
the Protective Order of another District Court. As Plaintiff has informed American repeatedly, the Protective Order entered by Judge Hood in
the NW/CO case prohibits the disclosure to American of documents designated as either confidential or
highly confidential pursuant to that Order.(19) American is fully familiar with the Protective Order
entered by Judge Hood because American itself was served with a subpoena in NW/CO. Indeed, in
order to protect American's confidential information in documents that it produced in NW/CO,
American's counsel participated in a May 3, 1999, hearing on the United States' motion for entry of
the NW/CO Protective Order. (Conrath Decl., Ex.3).
Paragraph 2 of the NW/CO Protective Order states, in pertinent part:
Disclosure of Confidential or Highly Confidential material to any person pursuant to this
Order shall be solely for the purposes of the preparation, hearing, trial, and any appeal
of this action, and for no other purpose whatsoever, provided, however, that the
Department of Justice, subject to taking appropriate steps to preserve the
confidentiality of such material, may disclose material designated as confidential or
Highly Confidential to employees of the Executive Branch outside the Department of
Justice, and may use such information for any valid law enforcement purpose
pursuant to 15 U.S.C. § 1 et seq.; 15 U.S.C. § 1311-14 et seq.; 15 U.S.C. § 12 et
seq.; or any other applicable law. (Emphasis supplied).
In other words, Judge Hood specifically created a structure that balanced the confidentiality
expectations of the airlines that produced materials in the NW/CO case and the legitimate needs of the
United States to use the NW/CO materials for "any valid law enforcement purpose." The terms of the
NW/CO Protective Order cannot be mistaken -- the United States may not disclose materials subject
to the NW/CO Protective Order outside of the context of NW/CO except to members of the Executive
Branch. NW/CO Protective Order, ¶ 2. While Plaintiff has no desire to prevent American from gaining
access to the NW/CO materials, Plaintiff does not find in the NW/CO Protective Order any exception
to the language of Paragraph 2 that would permit it to disclose materials protected by the NW/CO
Protective Order absent an Order from Judge Hood modifying the terms of Paragraph 2.
American nevertheless has stubbornly held to the position that the United States can comply
with Judge Hood's Order essentially by complying with the terms of the September 14, 1999,
Protective Order ("Stipulated Protective Order") entered in this case. American thus claims that the
United States, upon receiving American's Second Set of Document Requests, should have notified all
persons that had produced documents in NW/CO potentially responsive to American's overly-broad
discovery requests that a request concerning their documents had been received,(20) giving those persons
21 days to either designate whether documents were confidential or to petition the Court for an order
limiting disclosure of that information.(21) The NW/CO Protective Order, however, simply does not
permit the United States to proceed as American prefers.(22) The United States believes that the proper forum for deciding issues relating to the correct
interpretation of the NW/CO Protective Order (which, unlike the Stipulated Protective Order, did not
result from an agreement between the parties but was entered by the Court over Northwest's
objections) is before the Court that entered that Order. Proceeding in such a manner would permit the
parties whose documents American seeks to state their views on the discoverability of these documents
before the documents are produced. The United States has taken steps to make any the few NW/CO documents that it has used in
this case available to American. Plaintiff has thus issued subpoenas in this case for those NW/CO
documents that it has used,(23) thereby providing American with notice that the documents had been used
and ensuring that American would receive copies of the documents in discovery in this case. American
has already received six of the seven documents so used. French Decl., ¶ 11. CONCLUSION
For the aforementioned reasons, Defendants' motion should be denied.
By:_______________/s/________________Craig W. Conrath
1. American discusses the AT&T opinion in its brief, but also suggests that the guidelines in that
case are not binding in this case. During the meet-and-confer process, the United States asked
whether American believes some other standard applies in this case, but American has not suggested a
standard that it believes is more appropriate. (Conrath Decl., ¶ 7).
2. A true and correct copy of the National Union Fire Insurance case is attached to the
Appendix in Support of Plaintiff's Opposition to American's Motion to Compel Documents Responsive
to American's First and Second Sets of Document Requests ("Appendix") as Ex. A.
3. The United States has not produced publicly available documents nor documents received
from American. 4. The United States will continue to produce CID materials in accordance with the AT&T
holding, as use is made of those documents.
5. See Memorandum of Law in Support of Defendants' Motion to Compel Documents
Responsive to American's First and Second Sets of Document Requests ("AA Memo."), at 16 n.14.
6. The documents at issue (CID materials obtained by the United States from three low-cost
airlines) were also responsive to other requests in Defendants' Second Set of Document Requests
(including Request No. 3 and Request No. 4). Like other documents responsive to multiple requests,
these documents were not labeled to correspond with any particular request.
7. The CIDs, correspondence relating to them, and other correspondence relating to the ongoing
investigation have been withheld on the basis of the law enforcement investigatory files privilege, further
explained below. As for the materials obtained in response to those CIDs, the United States will
continue to supplement its production of documents responsive to Defendants' discovery request if use
is made of those documents.
8. See Conrath Decl., Ex. 5 (February 16, 2000 letter to Edward Soto, Esq., from Craig
Conrath).
9. It is not unusual for the Division to investigate multiple possible violations with the same matter
number, and for those investigations to lead to the filing of different cases. (Conrath Decl., ¶ 9.)
10. Plaintiff has already produced copies of the CIDs, correspondence relating to the CIDs, and
information supplied orally to the Division in connection with that investigation.
11. The United States stated in its disclosure that American's interpretation of Rule 26 seemed
"designed to encourage overbroad disclosure, as the United States has contacted representatives from
almost every domestic airline, numerous airports, and many travel-related businesses in the course of its
prior investigations in this industry." (French Decl., Ex. 2.)
12. The only documents being withheld solely in reliance on the law enforcement investigative
files privilege are the CIDs issued to the carriers being investigation inthe Division's ongoing
investigation and correspondence between those carriers and the United States.
13. The United States also asserted the deliberative process privilege as to any document request
calling for internal, pre-decisional memoranda. We do not understand Defendants' pending motion to
be seeking such documents. 14. Mr. Nannes' affidavit does not address the government's four other open investigations of
possible anticompetitive conduct by domestic carriers. The United States has not produced documents
from those investigations, three of which involve suspected anticompetitive combinations and one of
which involves possible violation of a consent decree entered in United States v. ATP, 1994 WL
502091 (D.D.C. Aug. 10, 1994). 15. In the pre-complaint investigation of Northwest and Continental, the United States received
documents from Northwest, Continental and third parties pursuant to CIDs. Since filing its complaint in
the Northwest/Continental litigation, the United States has received more documents pursuant to
discovery subpoenas. Parties and non-parties were given an opportunity to designate document
produced prior to the complaint in accordance with the protective order. The vast majority of the
documents produced both pre and post complaint have been designated as confidential or highly
confidential pursuant to the NW/CO protective order. 16. Indeed, American has done so, and has provoked at least one relevance objection from the
documents' owner. American has issued subpoenas to all of the airlines that produced documents in
NW/CO seeking all documents produced to the United States, and most (if not all) of these airlines
have objected to the production of the totality of these documents to American (See, e.g., French
Decl., Ex.3).
17. The United States suggested such an approach to American. See Conrath Decl., Ex. 4).
18. The United States informed American that it would not object to such a modification request. See Conrath Decl., Ex. 4.
19. The United States did inform American, in its Rule 26(a)(1) Initial Disclosures, that it
possessed documents from the NW/CO investigation, but it would not be producing those documents
due to the Protective Order in place in the NW/CO case. Obviously, the United States cannot waive
20. Alternatively, under American's view, the United States should have reviewed all documents
produced in NW/CO to determine whether they were potentially responsive to American's discovery
request and then notified the original producers.
21. Contrary to American's claims, the United States has never told American that it would
invoke the "notice" procedures suggested by American. Once American made clear in the meet-and-confer process that it expected the United States to proceed by invoking the "notice" procedures, we
agreed to confer with the Division staff working on the NW/CO case regarding whether the process
was consistent with Judge Hood's Protective Order. The response we received to that inquiry was a
resounding "no." (Conrath Decl., ¶5)
22. Indeed, such disclosure could result in other airlines' NW/CO documents receiving less
protection from disclosure to American's business executives than American's counsel sought -- and
obtained -- for its own documents in the NW/CO proceeding. (See Conrath Decl., Ex. 3 and 4).
23. The United States found only six documents in the documents produced by Delta in response
to a NW/CO subpoena that it believes are in any way relevant to this case, and only one document
produced by Midwest Express has been used by the United States in this case.