A Norwegian-based ocean transport company and one of its executives, preparing to take a major constitutional issue to the Supreme Court, took an initial step on Thursday by asking Justice David H. Souter to temporarily block an antitrust indictment of them while their appeal unfolds. They have been threatened with prosecution in an ongoing Justice Department investigation of an alleged plot to divide up customers in the industry that provides “parcel tanker” shipping. (Souter on Friday called for a response by the Justice Department, due by Monday afternoon.)
The petition for review in Stolt-Nielsen S.A., et al., v. U.S. (docket 06-97), asks the Court to spell out the powers of federal judges to stop the Justice Department from going ahead with a criminal indictment. The petition raises this specific question: “Do the federal courts lack authority, under the Separation of Powers, to enjoin federal prosecutors from breaching a binding contractual obligation ‘not to bring any criminal prosecution’ against a company and its executives?” (The texts of the petition and the stay application [06-A-79] can be found under the “antitrust litigation archive” link on the company’s website.)
Stolt-Nielsen is a major competitor in the business of moving cargo by “parcel tanker.” That is a sea-going vessel that has been outfitted to carry bulk chemicals, edible oils, acids and other special liquids, with the contents of a given vessel’s cargo segregated into separate tanks with temperature and other controls. The Justice Department investigation of business practices in that industry has led to guilty pleas by two of Stolt-Nielsen’s competitors and some of their executives. Stolt-Nielsen contends that those prosecutions were derived from evidence it supplied, under a deal with the Justice Department to avoid charges.
In late 2002, Stolt-Nielsen began negotiating with the Antitrust Division under the official amnesty or immunity program, which provides that the first individual or company to blow the whistle on antitrust violations in its industry gets a promise that it will not be prosecuted. The amnesty agreement was signed on Jan. 15, 2003, and it included a promise that the company and its executives “would not be prosecuted criminally” for any actions prior to that date.
The company contends that, in return, it began supplying what it calls “smoking gun” evidence against some of its competitors, showing a plot to allocate customers among them. But, in the following June, the Justice Department, contending that the company had violated the deal, filed a criminal complaint against Stolt-Nielsen’s former managing director of tank trading, Richard B. Wingfield. He has not yet been formally indicted. The Justice Department threatened both him and the company with criminal indictment, but it has held off while they challenged what they have contended is the Department’s failure to live up to its part of the deal.
U.S. District Judge Timothy J. Savage of Philadelphia ruled that the company had lived up to its obligations under the deal, and concluded that the Justice Department “got the benefit of its bargain.” Savage thus enjoined the Department from prosecuting and indicting the company and any of its employees, including Wingfield.
The Third Circuit Court on September 10 last year overturned Savage’s order, and found that the District Court had no authority constitutionally to block the prosecution. Moreover, it concluded that the company and its executives had gained amnesty only from conviction, and not from being indicted. “Simply being indicted and forced to stand trial is not generally an injury for constitutional purposes,” the Circuit Court concluded, saying that federal courts only have authority to block a federal prosecution if that would violate constitutional rights. (The Circuit Court’s opinion, docket 05-1480, can be found here.)
(NOTE: At the time of the Circuit Court’s hearing in the case, Samuel A. Alito, Jr., was a member of the panel. He has since become a Supreme Court Justice, and took no part in the final Circuit ruling that the company and its executive now challenge. It is up to Alito to decide whether or not to take part when the Supreme Court acts on the appeal.)
The plea to temporarily block the imminent indictment was filed with Justice Souter because he is the Circuit Justice for that area in the federal court system. It is up to him to decide whether to pass the request on to his colleagues for action.
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