Stolt-Nielsen, S.A. v. United States (United States Supreme Court) 

This is a petition for certiorari seeking Supreme Court review of the Third Circuit’s recent decision in Stolt-Nielsen, S.A. v. United States, 442 F.3d 177, amended 447 F.3d 861 (3d Cir. 2006). The issue in the case is whether the federal government may indict a corporation that has obtained a non-prosecution agreement for cooperation with a criminal investigation without first obtaining a judicial determination that the corporation violated the terms of the non-prosecution agreement. The facts and procedural history, briefly stated are as follows: Stolt-Nielsen (which is a Connecticut-based company) obtained a non-prosecution agreement from the federal government for its cooperation in the investigation of antitrust violations. Subsequently, the federal prosecutors terminated the agreement on the ground that Stolt-Nielsen had violated its terms and they announced their intention to indict the company and one of its executives. Stolt-Nielsen sought and obtained an injunction from the Federal District Court in Pennsylvania, preventing the issuance of an indictment, on the ground that prosecution was precluded by the non-prosecution agreement. The Third Circuit reversed the District Court’s holding, finding that the District Court did not have the authority to enjoin the executive branch from indicting the company and its executive. The Third Circuit found that the indictments would not chill the company’s constitutional rights, because Stolt-Nielsen would have the opportunity to assert its interpretation of the non-prosecution agreement after indictment. The Court saw no relevance to the fact that in the context of corporate criminal prosecutions an indictment alone can seriously harm or even destroy a company, noting that “simply being indicted,” regardless of practical consequences, was merely a “painful obligation of citizenship” and not “an injury for constitutional purposes.” NELF has filed an amicus brief in support of Stolt-Nielsen, arguing that the federal government should not be able to indict in these circumstances absent a pre-indictment court determination that the non-prosecution agreement has been breached or does not apply. NELF’s particular contribution to Stolt-Nielsen’s argument is its marshalling of Supreme Court precedents in support of the argument that, because Stolt-Nielsen possesses a constitutionally protected property interest in the non-prosecution agreement, that agreement and Stolt-Nielsen’s rights under it are entitled to a heightened degree of protection. Therefore, there is a sound basis for a departure in this case from the usual rule (followed by the Third Circuit) that the judicial branch will not interfere with the executive branch’s plenary power to bring an indictment as it sees fit. NELF also argued that the lack of precedent concerning pre-indictment relief based on corporate non-prosecution agreements is due to their relative novelty, and that, in the corporate context, such agreements are different from individual immunity agreements for a number of reasons, including their complexity, their thoroughness, and their concern largely with economic and regulatory matters. NELF argued that as a matter of policy the adverse consequences of a corporate indictment go far beyond the individuals involved in a typical criminal case, and harm completely innocent shareholders and employees, who may lose their jobs and investments. Although only in dictum, the Seventh Circuit recently stated that “the preferred procedure, absent exigent circumstances, would be for the government to seek relief from its obligations under the immunity agreement prior to indictment. Since the government is required to obtain a judicial determination of a defendant’s breach prior to trial, it is but a de minimis inconvenience for the government to secure that determination pre-indictment.” United States v. Meyer, 157 F.3d 1067, 1077 (7th Cir. 1998). This guidance is especially appropriate in the corporate context, where the collateral harm to innocent employees and investors is so great, the corporation is unlikely to flee, and its assets are readily traceable and, after commencement of an investigation, unlikely to be dissipated without government knowledge.