Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: No access to SCA grand jury transcripts from dismissed Texas criminal matter in civil ‘no-poach’ litigation, (Nov 12, 2024)

By Seth Abrams, J.D., M.A.

Court noted that plaintiffs should have appealed the Texas court’s denial of the petition, rather than petitioning it for grand jury materials it cannot consider under Criminal Rule 6(e).

The federal district court in Chicago denied plaintiffs Scott Keech and Allen Spradling’s motion to compel the DOJ to produce grand jury transcripts from the criminal prosecution of defendants Surgical Care Associates, LLC and SCAI Holdings, LLC (collectively, “SCA”) that took place in the Northern District of Texas. Keech and Spradling are former senior employees of SCA. In this action, the operative complaint alleged that SCA, along with DaVita and other outpatient medical centers, conspired to reduce and limit compensation and mobility of their senior-level employees (In Re Outpatient Medical Center Employee Antitrust Litigation, No. 1:21-cv-00305 (N.D. Ill. Nov. 6, 2024).

Background. A federal grand jury in the Northern District of Texas indicted SCA of two counts of conspiring to restrain trade in violation of Section 1 of the Sherman Act in January 2021. Access to these transcripts is at issue in this matter. In addition, in July 2021, a federal grand jury in the District of Colorado indicted DaVita Inc. and its CEO of two counts of conspiring to restrain trade, again in violation of Section 1 of the Sherman Act. A jury acquitted DaVita and its CEO in April 2022, and the DOJ voluntarily dismissed the criminal case against SCA in the Northern District of Texas in November 2023.

The senior employees are pursuing civil antitrust claims against SCA, DaVita, and others arising out of alleged no-poach agreements in the outpatient medical care industry. In January 2024, they served a subpoena to the DOJ related to the SCA Criminal Action.

The senior employees attempted to secure the grand jury materials from the SCA Criminal Action in Texas. The Texas court did not “entertain Plaintiffs’ arguments for any document discovery and denied Plaintiffs’ petition as moot, ruling that the court lacked jurisdiction because the government dismissed the SCA case with prejudice.”

Analysis under Rule 26 and 45. The senior employees argued that the requested materials here satisfied Rule 26 and 45 because they are ‘relevant, non-privileged and proportional to the needs of the case and no undue burden is imposed on the DOJ to produce these materials.” However, the court rejected these arguments as previously addressed and, regardless, held that disclosure of grand jury materials is governed not by Rules 26 and 45, but instead by Criminal Rule 6(e), which provides that disclosure is left to the “sound discretion” of the court.

Rule 6(e). Under Criminal Rule 6, matters “occurring before a grand jury may not be disclosed unless certain exceptions apply;” A party seeking disclosure of grand jury proceedings bears the “burden of demonstrating that the need for disclosure is greater than the public interest in secrecy.” The court first noted that the senior employee’s assertion that Criminal Rule 6 does not apply to their request for the Texas grand jury transcripts is without merit, holding that it was premised on “an incorrect reading of the Texas court’s opinion denying as moot” the senior employees’ petition for grand jury materials. The court noted that it declined to “add language to the Texas court’s ruling that is not there.”

The court rejected the argument by the senior employees that “none of the policy rationales underlying the secrecy of grand jury transcripts are present.” It noted that it cannot analyze these factors because it did not oversee the SCA Criminal Action’s grand jury. Criminal Rule 6(e)(3)(F) provides that “any petition to disclose a grand jury matter... must be filed in the district where the grand jury convened. The court noted that the senior employees were “familiar with this process.” While they did “petition the grand jury court, they did not receive a Criminal Rule 6 ruling nor did the grand jury court transfer the petition” to the Northern District of Illinois. The court concluded that the senior employees “should have appealed the Texas court’s denial of the petition, rather than petitioning this court for grand jury materials which it cannot consider under Criminal Rule 6(e).”

Particularized need. The senior employees did not show a particularized need for the grand jury materials, arguing only for time lapse leading to a failure of memory. The court held that testimony affected by memory loss here “frankly does not demonstrate a particularized need.”

The Case is No. 1:21-cv-00305.

Judge: Kim, Y.

Attorneys: Cadio Zirpoli (Joseph Saveri Law Firm, LLP) for Rhonda Roe and Scott Keech. Amy Beth Manning (McGuireWoods LLP) for Surgical Care Affiliates, LLC. Brian Joseph Smith (K&L Gates, LLP) for Andrew Hayek. Emily Shoemaker Newton (King & Spalding LLP) for United Surgical Partners Holding Co. Inc.

Companies: Surgical Care Affiliates, LLC; United Surgical Partners Holding Co. Inc.

Cases: Antitrust IllinoisNews