UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF NEW YORK

_____________________________
)
UNITED STATES OF AMERICA, )
)
PLAINTIFF, )
) Civil Action No. 96 CIV 5313 (RWS)
v. )
)
ALEX. BROWN & SONS, INC. )
et al. )
)
DEFENDANTS. )
_____________________________)
MEMORANDUM IN OPPOSITION TO MOTION OF PLAINTIFFS IN THE
IN RE NASDAQ MARKET-MAKERS ANTITRUST LITIGATION
TO INTERVENE OR TO APPEAR AS AMICUS CURIAE

The United States opposes the motion of the plaintiffs in a

private civil damages case, In re Nasdaq Market-Makers Antitrust
Litigation, who have sued certain market makers in Nasdaq stocks

under the antitrust laws (hereinafter "private plaintiffs") to

intervene in this antitrust action by the United States for
injunctive relief against several of the same defendants; in

addition, the United States opposes the private plaintiffs’

alternate suggestion, that they be allowed to participate as
amicus curiae in this proceeding to determine whether entry of

the proposed consent settlement is "in the public interest." 15

U.S.C. 16(e).
In making this "public interest" determination, "the court’s
function is not to determine whether the resulting array of
rights and liabilities is the one that will best serve society,
but only to confirm that the resulting settlement is within the

reaches of the public interest." United States v. Microsoft

Corp., 56 F.3d 1448, 1460-61 (D.C. Cir. 1995) (emphasis in
original) (internal quotations omitted); accord, United States v.
Bechtel Corp., 648 F.2d 660, 666 (9th Cir.), cert. denied, 454
U.S. 1083 (1981); United States v. Gillette Co., 406 F. Supp.

713, 716 (D. Mass. 1975).

The clear purpose of the private plaintiffs’ motion is to
obtain discovery. Under the Federal Rules of Civil Procedure,
the standard for either mandatory or permissive intervention in a
Tunney Act proceeding is very high, and obtaining discovery does
not meet that standard. "[I]ntervention of right has been

recognized only where a showing of bad faith or malfeasance on

the part of the Government has been made." United States v.
International Business Machines Corp., 1995-2 Trade Cas. (CCH)

¶ 71,135, at 75,456 (S.D.N.Y. 1995). "[A] private party will not

be permitted to intervene as of right [in a Tunney Act
proceeding] absent a showing that the Government has failed

‘fairly, vigorously and faithfully’ to represent the public

interest." United States v. American Cyanamid Co., 556 F. Supp.
357, 360 (S.D.N.Y. 1982), aff’d in part and rev’d in part, 719

F.2d 558 (2d Cir. 1983), cert. denied, 465 U.S. 1101 (1984)
(quoting United States v. Ciba Corp., 50 F.R.D. 507, 513
(S.D.N.Y. 1970)); see also United States v. Stroh Brewery Co.,

1982-2 Trade Cas. (CCH) ¶ 64,804, at 71,960 (D.D.C. 1982)

(requiring claim of bad faith or malfeasance).
In government antitrust cases, the law explicitly provides a
mechanism for private parties to present their views regarding of
the proposed relief to the Court. The Antitrust Procedures and

2
Penalties ("Tunney") Act, 15 U.S.C. 16(b)-(h), provides that any
interested person may submit a written comment to the Department
of Justice regarding the proposed relief. The Department must
then both make public that comment and respond to it in writing.
15 U.S.C. 16(d). Private plaintiffs have not explained why
amicus status is necessary or desirable to advance any Tunney Act
interest.
The private plaintiffs here do not claim that the Department
has failed to represent the public interest vigorously, let alone

that the Department acted with bad faith or malfeasance in

agreeing to resolve the case -- nor could they. Further, they
have not shown why the Tunney Act provision permitting them to

comment on the proposed relief does not provide an adequate

mechanism for expressing their views to the Court. For these
reasons and the reasons discussed below, the United States urges

the Court to deny both the private plaintiffs’ motion to

intervene and their alternative motion to participate as amicus
curiae.

Statement
In May 1994, the results of an economic study conducted by
Professors William Christie of Vanderbilt University and Paul

Schultz of Ohio State University (the AChristie/Schultz study@)

were published in several newspapers. The study suggested that
dealers in stocks traded on The Nasdaq Stock Market may have
tacitly colluded to avoid odd-eighth price quotations on a
substantial number of Nasdaq stocks. Beginning that month, the

3
private plaintiffs filed a number of lawsuits against several
market makers in Nasdaq stocks. The private cases have been
consolidated in the Southern District of New York, M.D.L. 1023.
Competitive Impact Statement ("CIS") 5 n.2, Exhibit A to
plaintiffs’ Memorandum in Support of Motion to Intervene
(hereafter "Pl. Mem.").
In the summer of 1994, the Department of Justice initiated
its investigation into possible collusion among Nasdaq dealers.
CIS 4. In the course of its investigation, the Department served
over 350 civil investigative demands ("CIDs") pursuant to 15
U.S.C. 1312 of the Antitrust Civil Process Act ("ACPA"), 15
U.S.C. 1311-1314. In addition, the Department reviewed hundreds
of responses to interrogatories that were submitted by the
defendants and others, and took over 225 depositions. CIS 5.
On July 17, 1996, the United States filed a complaint

alleging that the defendants1 had engaged in price fixing in

violation of section l of the Sherman Act, 15 U.S.C. l. On the
same day, the United States and the defendants filed a proposed

Stipulation and Order ("proposed order") to resolve the

1
There is not an identity of defendants between the private
cases and the government’s case. The private plaintiffs’ case
names twelve defendants not named in the government’s case:
Cantor, Fitzgerald & Co.; Cowen & Co.; Everen Securities;
Jeffries & Co., Inc.; Kidder, Peabody & Co., Inc.; Legg Mason
Wood Walker, Inc.; Montgomery Securities; Oppenheimer & Co.,
Inc.; Robertson, Stephens & Co.; Weeden & Co., L.P.; A. G.
Edwards & Sons; and J. C. Bradford & Co. In the government’s
case there are two defendants not named in the private
plaintiffs’ case: Furman Selz, LLC; and J. P. Morgan Securities,
Inc.

4
allegations in the complaint. Entry of the proposed order is
subject to the Tunney Act. Accordingly, the United States has
filed and published in the Federal Register its Competitive
Impact Statement and the proposed order that would resolve the
case, in response to which the public has a right to file
comments. 15 U.S.C. 16(b)-(d). All comments received, as well
as the government’s response to them, will be available for the
Court’s review in deciding whether entry of the proposed order is
in the public interest. 15 U.S.C. 16(e)-(f).
By notice of motion dated August 28, 1996, the private
plaintiffs moved pursuant to Fed. R. Civ. P. 24(a) and (b), and
section 2(f)(3) of the Tunney Act, to intervene or, in the

alternative, to appear as amicus curiae in this case. Private

plaintiffs seek to intervene for two purposes. First, they seek
to require the Department of Justice to disclose to them the

Settlement Memorandum (and all associated materials) that the

Department prepared in connection with the negotiation of the
proposed order. That Settlement Memorandum (described by the

private plaintiffs as the "compilation of evidence") outlines the

evidence collected by the Department in the course of its
investigation, sets forth the violations uncovered, and explains
the Department’s legal theory.2

2
A substantial portion of the Settlement Memorandum contains
material gathered by the Department in response to the CIDs
served on defendants and others pursuant to the ACPA. Such
materials may not be discovered from the government. 15 U.S.C.
1313(c)(3). In addition, the Settlement Memorandum contains
confidential evidentiary materials gathered by the Securities and

5
 Second, private plaintiffs seek intervention to challenge
paragraph IV(C)(6) of the proposed order, which provides that the
audio

[t]apes . . . [defendants are required to create,

review and maintain] pursuant to this stipulation and
order shall not be subject to civil process except for
process issued by the Antitrust Division, the SEC, the
NASD, or any other self-regulatory organization, as
defined in Section 3(a)(26) of the Securities Exchange
Act of 1934, as amended.
The provision would also limit the admissibility of such tapes in
evidence in civil proceedings to actions commenced by the
Antitrust Division, the SEC, the NASD or any other self-
regulatory organization, as defined in the securities laws.3

Exchange Commission and made available to the Department for law

enforcement purposes. These materials are also not discoverable
from the government. 44 U.S.C. 3510(b). As the private
plaintiffs note (Pl. Mem. 19), the Department prepared the
Settlement Memorandum for the express purpose of describing its
case and legal theory to the prospective defendants. The
Department did so in the belief that, confronted with some of the
evidence the Department had amassed during its investigation
(given the legal standard to show a violation), the prospective
defendants would be inclined to settle. (Although the Settlement
Memorandum was shown to the defendants, they were not permitted
to remove it from the premises of the Department or make copies
of it.) Private plaintiffs are also seeking to obtain "all
evidentiary materials expressly referenced in the compilation of
evidence." Pl. Mem. l. Again, that evidence consists of
information obtained from defendants and others in response to
CIDs, as well as materials made available to the Department by
the Securities and Exchange Commission.
3
In December 1995, private plaintiffs moved for an order
pursuant to Fed. R. Civ. P. 37(a) to compel defendants to produce
a wide range of documents responsive to or otherwise relating to
the CIDs. See In re Nasdaq Market-Makers Antitrust Litigation,
929 F. Supp. 723, 724 (S.D.N.Y. 1996). In March 1996, the Court
ruled that although CID materials may not be discovered from the
government, there is no corresponding protection for documents
(or copies thereof) produced in response to a CID that are in the
hands of a defendant; thus, their production, if they met certain

6
 Argument
I. PRIVATE PLAINTIFFS SHOULD NOT BE GRANTED INTERVENOR
STATUS IN THIS GOVERNMENT ENFORCEMENT ACTION
Private plaintiffs contend that they are entitled to
intervene as a party in this Tunney Act proceeding and to gain

access to the government’s Settlement Memorandum, together with

all evidentiary materials expressly referenced in the Settlement
Memorandum and any associated materials. Pl. Mem. 1. They claim
this will assist them with discovery in their treble damage
action, and that it will enable them to assist this Court in its
public interest determination required to be made under the

Tunney Act. Pl. Mem. 3. Neither of these purposes is grounds

for intervention under Fed. R. Civ. P. 24 or the Tunney Act.
A. Private Plaintiffs Do Not Satisfy the
Requirements For Intervention as of Right
Private plaintiffs claim a right to intervene under Fed. R.

Civ. P. 24(a)(2), which provides for intervention:

when the applicant claims an interest
relating to the property or transaction which
is the subject of the action and the
applicant is so situated that the disposition
of the action may as a practical matter
impair or impede the applicant’s ability to
protect that interest, unless the applicant’s

additional criteria, was ordered. Id. at 724-25. On August 28,

1996, the private plaintiffs moved in their case "To Lift The
Stay Of Discovery And To Compel Defendants To Produce CID
Deposition Transcripts And The Compilation of Evidence," seeking
from the defendants essentially the same information, i.e., the
Settlement Memorandum and associated evidence, that they seek
from the government here under the Tunney Act. Both the motion
to intervene in the government case and the discovery motion in
the private case are scheduled to be argued on October 16.

7
 interest is adequately represented by
existing parties.

Thus, an applicant must show that (l) it has an interest relating

to the subject of the action; (2) it is so situated that the
disposition of the action may as a practical matter impair or
impede its ability to protect that interest; and (3) its interest
is not adequately represented by existing parties. Restor-A-Dent
Dental Laboratories, Inc. v. Certified Alloy Products, Inc., 725

F.2d 871, 874 (2d Cir. 1984); United States v. International

Business Machines Corp., 1995-2 Trade Cas. (CCH) ¶ 71,135, at
75,455 (S.D.N.Y. 1995); In re Ivan F. Boesky Securities

Litigation, 129 F.R.D. 89, 94 (S.D.N.Y. 1990).

Private plaintiffs have not made that showing here: they
have not demonstrated an "interest" relating to the subject of

this action that will in any way be "impair[ed]" by entry of the

consent decree. Thus, the standard for mandatory intervention
under Fed. R. Civ. P. 24(a)(2) has not been met.

(i) Private Plaintiffs Are Not Entitled to Intervene

As of Right to Advance Their Private Interests
Private plaintiffs’ principal purpose in seeking
intervention is to advance discovery in their private case. See,
e.g., Pl. Mem. 2, 9-16. They offer no citation of authority for
their conclusory, but erroneous, assertion that they "clearly"
have a Rule 24(a) "interest" in this Tunney Act proceeding. See
Pl. Mem. 9. The fact that their private treble-damage action is
premised upon an alleged price-fixing conspiracy among market
makers in Nasdaq stocks (as is the government’s complaint) and

8
that disclosure of the government’s evidence in this suit would
advance their private suit is plainly not such an interest.
E.g., United States v. Automobile Manufacturers Ass’n, 307 F.

Supp. 617, 619 (C.D. Cal. 1969), aff’d per curiam, 397 U.S. 248
(1970) ("it is well settled that treble damage claimants do not
have an `interest’ cognizable under Rule 24(a) F.R.Civ.P. in

Government anti-trust actions seeking injunctive relief"); see

also H.L. Hayden Co. of New York v. Siemens Medical Systems,
Inc., 797 F.2d 85, 87-88 (2d Cir. 1986) (state had no

"significantly protectable interest" to warrant intervention in

private antitrust suit where intervention was sought to gain
access to "work product" materials); In re Penn Central

Commercial Paper Litigation, 62 F.R.D. 341, 346 (S.D.N.Y. 1974)

(an "interest" under Rule 24(a)(2) "must be significant, must be
direct rather than contingent, and must be based on a right which

belongs to the proposed intervenor rather than to an existing

party to the suit"), aff’d mem., 515 F.2d 505 (2d Cir. 1975);
Wright, Miller & Kane, Federal Practice and Procedure (Civil 2d)

§ 1908, at 270-72 (1986); 3B Moore’s Federal Practice ¶ 24.07[2],

at 24-54, 24-57 (2d ed. 1993).4

4
Private plaintiffs, moreover, have not made even the most
minimal showing of any present "interest" in the audio tapes that
defendants are required to create in the future. See Pl. Mem.
10, heading "A" ("Compilation of Evidence and Audiotapes Are
Crucial Evidence in the Multidistrict Litigation"). The content
of future tapes is as speculative as the usefulness to which they
might be put in some "future litigation brought by [unidentified]
injured investors." See Pl. Mem. 15.

9
 Significantly, private plaintiffs do not claim that the
entry of the proposed order in this case would affect their
ability to prevail in their case. Indeed, there is no suggestion
at all by the private plaintiffs that the entry of an order
containing mandatory and prohibitory provisions regarding future
conduct could possibly affect the viability of any claim they
have against any of the overlapping defendants for events alleged
to have occurred in the past. Thus, entry of the proposed order
in the government case will not infringe on any interest the

private plaintiffs have in any "transaction which is the subject

of the [government] action." Fed. R. Civ. P. 24(a).
Moreover, it is clear that entry of the proposed order will

not affect the private plaintiffs’ damages claims. No rule of

law would be established by entry of the proposed order that
would in any way inhibit their ability to obtain an award of

damages. Further, it is clear that entry of a forward-looking

order could not possibly affect the viability of any claim the
private plaintiffs have for past conduct.

In reality, the private plaintiffs do not seek to protect

any Ainterest@ that would be impaired by entry of the proposed
order, but merely to obtain benefits from this proceeding that

more properly are considered in the context of their own lawsuit.

See, e.g., Pl. Mem. 16 (noting "[t]he importance to injured
investors of obtaining the evidence underlying the Competitive

Impact Statement . . .@ (emphasis added), but conspicuously

failing to state how the adjudication of the government’s case

10
and entry of the proposed order would infringe on any legal right
of the private plaintiffs).
Given the private plaintiffs’ failure to meet the first
requirement for mandatory intervention -- the establishment of a
cognizable Ainterest@ in the subject of the action -- their
motion for intervention as of right must be denied.
Even if facilitation of discovery in the plaintiffs’ private
action were an appropriate "interest" to be protected under Rule
24(a), that interest would not be "impaired" by entry of the

proposed order, as Rule 24 requires. The private plaintiffs seek

discovery of the government’s Settlement Memorandum. This
document contains CID materials obtained by the Department during

its investigation, evidence provided to the Department by the SEC

for law enforcement purposes and the work product of the
Department.

The law protects information collected by the Department

under the ACPA from discovery. 15 U.S.C. 1313(c)(3), (e); see In
re Nasdaq Market-Makers Antitrust Litigation, 929 F. Supp. at
726. On the other hand, CID materials, if in the possession of a
private party, may be discoverable from the private party. Id.
If private plaintiffs can make the required showing under the

civil rules for discovery of CID materials produced by the

defendants, or others, in the course of the government’s
investigation, they may be able to discover them from the private

11
parties who possess them.5 To the extent private plaintiffs
simply want to piggyback on the government’s investigative
efforts and work product to ease their own litigation burden
(see, e.g., Pl. Mem. 12-14), that plainly is not a proper basis
for intervention. See SEC v. Everest Management Corp., 475 F.2d
1236, 1239 (2d Cir. 1972) (footnote omitted):
Appellants concede that they will not be
precluded by res judicata or collateral
estoppel from bringing their own action for
money damages regardless of the disposition
of the SEC’s action. Appellants’ essential
argument is that if intervention is denied
they will be required to bear the financial
burden of duplicating the SEC’s efforts
. . . . This is not the sort of adverse
practical effect contemplated by Rule
24(a)(2).
Accord Hayden Co. v. Siemens Medical Systems, 797 F.2d at 89;
Cunningham v. Rolfe, 131 F.R.D. 587, 590 (D. Kan. 1990) (no right

5
Currently, we understand, most of the defendants in the
private case do not possess copies of the CID deposition
transcripts of their employees or former employees. Private
plaintiffs have moved, in their separat, damages case, for an
order directing defendants to obtain copies from the Department.
The ACPA permits a witness who has given CID deposition testimony
to obtain a copy of his deposition transcript upon payment of
"reasonable charges," unless the Assistant Attorney General in
charge of the Antitrust Division determines that there is "good
cause [to] limit such witness to inspection of the official
transcript of his testimony." 15 U.S.C. 1312(1)(6). In their
"Memorandum of Law in Support of Plaintiffs’ Motion to Lift the
Stay of Discovery and to Compel Defendants to Produce CID
Deposition Transcript and the Compilation of Evidence" in In re
Nasdaq Market-Makers Antitrust Litigation, the private plaintiffs
take the position that the defendants have "control" of the CID
deposition transcripts of their current and former employees (see
Pl. Mem. 16-20 [private case]). The United States expresses no
view as to whether any of the defendants have the requisite
"control" (see Fed. R. Civ. P. 34) over these transcripts to be
able to direct such persons to request them from the Department.
The Court will hear argument on this motion on October 16.

12
to intervene where alternative discovery available to movants in
their own separate suit).
(ii) Absent a Showing of Bad Faith or Malfeasance, Private
Plaintiffs May Not Intervene as of Right to Second-
Guess the Government as to What the "Public Interest"
Requires
In addition to the contention that they should be entitled
to intervene to obtain discovery in their own case, private
plaintiffs claim a right to intervene to advance the "public
interest." They claim that they should be given access to the
government’s investigatory and evidentiary files because "only
following disclosure of the Compilation of Evidence . . . can

plaintiffs comment on the adequacy of the Consent Decree in an

informed way." Pl. Mem. 3, also 24. Clearly, this claim has
little connection to the established standards for Rule 24

intervention. Moreover, under the Tunney Act, intervention for

this purpose would be completely inappropriate.
The United States, not the private plaintiffs, represents

the public interest in government antitrust cases. "Precedent

requires that ‘the balancing of competing social and political
interests affected by a proposed antitrust consent decree must be
left, in the first instance, to the discretion of the Attorney
General. The court’s role in protecting the public interest is
one of insuring that the government has not breached its duty to
the public in consenting to the decree. United States v.
Motorola, Inc., 1996-1 Trade Cas. (CCH) ¶71,402, at 77,025

13
(D.D.C. 1995) (quoting United States v. Bechtel Corp., 648 F.2d
660, 666 (9th Cir.), cert. denied, 454 U.S. 1083 (1991)).
A court’s role in passing on a proposed consent judgment is
limited because a consent decree embodies a settlement, see
United States v. Armour & Co., 402 U.S. 673, 681 (1971),
reflecting both the Department’s predictive judgment concerning
the efficacy of the proposed relief and the Department’s exercise
of prosecutorial discretion. "A proposed consent decree is an
agreement between the parties which is reached after exhaustive

negotiations and discussions . . . . The agreement reached

normally embodies a compromise; in exchange for the saving of
cost and the elimination of risk, the parties each give up
something they might have won had they proceeded with the
litigation. . . . The proposed consent decree, therefore, should
not be reviewed under a standard of whether it is certain to

eliminate every anticompetitive effect of a particular practice

or whether it mandates certainty of free competition in the
future." Motorola, 1996-1 Trade Cas. at 77,026 (internal

quotations omitted).6
If a court were to engage in "an unrestricted evaluation of
what relief would best serve the public," it might threaten these

6
In evaluating the decree as a remedy for the particular
violations alleged, the Court must afford the Department even
greater deference than when the Court considers an uncontested
decree modification -- a context in which a court may reject the
proposal only if "’it has exceptional confidence that adverse
antitrust consequences will result.’" Microsoft, 56 F.3d at 1460
(quoting United States v. Western Electric Co., 993 F.2d 1572,
1577 (D.C. Cir.), cert. denied, 510 U.S. 984 (1993)).

14
benefits of "antitrust enforcement by consent decree," Bechtel,
648 F.2d at 666, and thereby frustrate Congress’s intent to
"retain the consent judgment as a substantial antitrust

enforcement tool." S. Rep. No. 298, 93d Cong., lst Sess. 7

(1973); accord H.R. Rep. No. 1463, 93d Cong., 2d Sess. 6 (1974).
Thus, applications for intervention to assist in the "public
interest" determination are almost always denied. See, e.g.,
United States v. International Business Machines Corp., 62 F.R.D.
530, 532 n.1 (S.D.N.Y. 1974); United States v. Blue Chip Stamp

Co., 272 F. Supp. 432, 439 (C.D. Cal. 1967), aff’d, 389 U.S. 580
(1968); Wright, Miller & Kane, § 1908, at 266 & nn.13, 15. "[A]
private party will not be permitted to intervene as of right

absent a showing that the Government has failed ‘fairly,

vigorously and faithfully’ to represent the public interest."
United States v. American Cyanamid Co., 556 F. Supp. at 360.

"[I]ntervention of right has been recognized only where a showing

of bad faith or malfeasance on the part of the Government has
been made." IBM, 1995-2 Trade Cas. at 75,456; accord, Bechtel,

648 F.2d at 666; United States v. G. Heileman Brewing Co., 563 F.

Supp. 642, 649 (D. Del. 1983); United States v. Associated Milk
Producers, Inc., 394 F. Supp. 29 (W.D. Mo.), aff’d, 534 F.2d 113,
117-118 (8th Cir.), cert. denied, 429 U.S. 940 (1976).
Private plaintiffs have not alleged, and could not allege,
bad faith or malfeasance of the government in this case. Thus,
they have no right to intervene to protect the public interest.

15
 B. Private Plaintiffs Should Not Be Granted
Permissive Intervention
A court may permit intervention under Fed. R. Civ. P. 24(b)
"when an applicant’s claim or defense and the main action have a
question of law or fact in common." But, in deciding whether

intervention is appropriate, the court must also "consider

whether the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties." Id.

The United States concedes that the private plaintiffs’ case and
its case, as charged in their respective complaints, have "a
question of law or fact in common." But the issue to be resolved

in this case -- whether entry of the proposed order is in the

public interest -- and the issue to be resolved in the private
case -- whether plaintiffs are entitled to damages as a result of

defendants’ alleged violation of the antitrust laws -- involve

very different questions of fact and law. Moreover, because
granting intervention could "unduly delay or prejudice the
adjudication of the rights of the original parties," intervention
should be denied.
The Tunney Act, 15 U.S.C. 16(f)(3), provides that, in making
the public interest determination, the court may
authorize full or limited participation . . . by
interested persons . . . including appearance amicus
curiae, intervention as a party pursuant to the Federal
Rules of Civil Procedure . . . or participation in any
other manner and extent which serves the public
interest . . . .

16
Section 16(f)(3) was not intended to enlarge the Federal Rules of
Civil Procedure regarding intervention. H.R. Rep. No. 1463, 93d
Cong., 2d Sess. 6 (1974).
In a Tunney Act proceeding, therefore, the court must take
into consideration what form of participation will appropriately
serve the public interest. 15 U.S.C. l6(f)(3). By leaving the
authorization of intervention to the Tunney Act court’s
discretion, Congress did not intend "to open the floodgates to
litigation, nor . . . to broaden the existing right of

intervention." 119 Cong. Rec. 24,599 (1973) (remarks of Senator

Tunney). The provisions of section 16(f)(3) were intended as a
"check on the case that has gone wrong;" they were not intended
to be used in the majority of settled cases.7 It was Congress’
expectation that "the trial judge will adduce the necessary
information through the least complicated and least time-

consuming means possible." S. Rep. No. 93-298 at 6; see also

7
I think you recognize and we all should, that of, say,
the 80 percent of cases that are settled by consent
decrees, either hearings or extensive briefs or
anything like that should occur in very few cases.
The hope is that this bill will provide a
check on the case that has gone wrong; that
this would not become a time consuming
proceeding for district judges, the Attorney
General, or the Antitrust Division in
general.
The Antitrust Procedures and Penalties Act: Hearings on S. 782
and S. 1088 Before the Subcommittee on Antitrust and Monopoly of
the Senate Judiciary Committee, 93d Cong., lst Sess. 26
(Hearings) (statement of Professor Harvey J. Goldschmid, Columbia
School of Law).

17
H.R. Rep. No. 93-1463 at 6 (bill preserves policy of encouraging
settlement by consent decree). This means that, in most cases,
the Tunney Act court should rely on the competitive impact

statement, the proposed consent decree and public comments to

make the public interest determination. 15 U.S.C. 16(b);
Motorola, 1996-1 Trade Cas. at 77,024, 77,025 n.8; United States

v. Gillette Co., 406 F. Supp. at 715; H.R. Rep. 93-1463 at 8-9;

119 Cong. Rec. 24,598 (1973) (remarks of Senator Tunney).8
Thus, as with claims for intervention as of right, the

"courts have consistently exercised their discretion to deny

motions for permissive intervention in antitrust consent
proceedings." IBM, 1995-2 Trade Cas. at 75,458; see G. Heileman

Brewing, 563 F. Supp at 649-50; United States v. Carrols

Development Corp., 454 F. Supp. 1215, 1221 (N.D.N.Y. 1978);
Automobile Mfgrs. Ass’n, 307 F. Supp. at 620-21. "[W]here there

is no claim of bad faith or malfeasance . . . the potential for

unwarranted delay and substantial prejudice to the original
parties implicit in the proposed intervention clearly outweighs

any benefit that may accrue therefrom." United States v. Stroh

Brewery Co., 1982-2 Trade Cas. (CCH) ¶ 64,804, at 71,960 (D.D.C.
1982), cited in IBM, 1995-2 Trade Cas. at 75,458; Crosby Steam

8
"Before entering the decree, the court must find that it is
in the public interest as defined by law . . . . The court is
nowhere compelled to go to trial or to engage in extended
proceedings which might have the effect of vitiating the benefits
of prompt and less costly settlement through the consent decree
process." 119 Cong. Rec. 24,598 (1973) (remarks of Senator
Tunney).

18
Gage & Valve Co. v. Manning, Maxwell & Moore, Inc., 51 F. Supp.
972, 973 (D. Mass. 1943) (additional parties always take
additional time, which tend to make the proceedings a "Donnybrook

Fair").
Nothing in this case suggests a different result. The Court
can have the full benefit of private plaintiffs’ views through
the Tunney Act’s public comment process without granting them
intervenor status. The cost of permitting intervention, on the
other hand, could be substantial. If the private plaintiffs are

granted intervenor status and have the right to expand the

"public interest" inquiry to include an inquiry into their own
private rights of discovery, the Tunney Act process will be side-

tracked without any countervailing advancement or elucidation of

the public interest. See IBM, 1995-2 Trade Cas. at 75,458;
United States v. AT&T, 1982-2 Trade Cas. (CCH) ¶64,726, at 71,525

& n.7, 71,526 (D.D.C. 1982).

Moreover, as discussed in part (A), above, the private
plaintiffs are free to seek discovery of the materials they seek

here in their own lawsuit. The pendency or possibility of

another action in which the applicant for intervention can
protect his rights is ordinarily a reason to deny permissive

intervention. Wright, Miller & Kane, § 1913, at 385-388; Roe v.

Wade, 410 U.S. 113, 125-127 (1973); G. Heileman Brewing, 563 F.
Supp. at 649; Associated Milk Producers, 394 F. Supp. at 45;

Microsoft, 56 F.3d at 1461 n.9; Lipsett v. United States, 359

19
F.2d 956, 959-960 (2d Cir. 1966); Hayden v. Siemens Medical
Systems, 797 F.2d at 88.
Because intervention would not advance the public interest
determination in this case, because private plaintiffs have not
demonstrated that they will be adversely impacted by entry of the
proposed order, and because private plaintiffs can advance their

interests in discovery in their private litigation, permissive

intervention should be denied.
II. THE COURT SHOULD REJECT PRIVATE PLAINTIFFS’ REQUEST TO ORDER
IMMEDIATE PRODUCTION OF THE SETTLEMENT MEMORANDUM
Private plaintiffs claim that, irrespective of whether they

are granted intervenor status, the Court should order production

of the Settlement Memorandum immediately so they can use the
fruits of the government’s investigative efforts in their private

litigation (Pl. Mem. 21-24) and so they may help the Court
evaluate whether the decree is in the public interest (id. at 24-
28). None of the Tunney Act provisions on which private

plaintiffs rely supports such an extraordinary order. The Tunney

Act does not contemplate a turnover of evidentiary materials
simply to benefit private plaintiffs, nor does it contemplate the
intrusion into the settlement process in a government case that
plaintiffs suggest.
A. The Settlement Memorandum Is Not a "Determinative"
Document Within the Meaning of 15 U.S.C. 16(b)
The United States has represented that there were no
"materials and documents" that it considered to be "determinative
in formulating" the proposed order. 15 U.S.C. 16(b). The

20
private plaintiffs contend that the Settlement Memorandum and
associated materials provided to defendants in advance of filing
and expressly referenced in the Settlement Memorandum were
determinative documents (Pl. Mem. 19-20) and should have been
made public. That simply is not what the statute says, or what
Congress intended.
The statute requires production of "materials and documents
which the United States considered determinative in formulating
such proposal." 15 U.S.C. 16(b) (emphasis added). On its face,

the statute refers only to the formulation of the relief

proposal, i.e., the proposed order, not to the decision to file
suit on particular claims or other issues beyond the scope of the

relief.
The statute also specifies on its face that the requirement
of disclosure is limited to "determinative" documents, a term

Congress would scarcely have chosen to describe all documents of

evidentiary relevance (which plaintiffs are essentially seeking).
Webster’s Third New International Dictionary provides, as the

first-listed definition of this adjective, "having power or

tendency to determine." Webster’s Third New International
Dictionary 616 (1981). This understanding of the term is
consistent with its use in other legal contexts.9

9
See Gagne v. Carl Bauer Schraubenfabrick, GmbH, 595 F. Supp.
1081, 1088 (D. Me. 1984) ("To be determinative, a state law
question must be susceptible of an answer which, in one
alternative, will produce a final disposition of the federal
cause."); Ziegler v. Wendel Poultry Services, Inc., 615 N.E.2d
1022, 1028 (Ohio 1993) (holding that trial court did not have to

21
 Moreover, 15 U.S.C. 16(b) calls for disclosure only if the
"United States considered" the documents determinative to the
formulation of relief. On its face, the statute does not require
disclosure of documents on the basis of the significance that
some third party might attribute to them. And the requirement
that the government have considered a document to be
determinative suggests that Congress had in mind only a small
number of documents of particularized significance, and not the
broad range of evidentiary materials suggested by the plaintiffs.

Indeed, the statutory language makes it clear that Congress did

not expect that there would be determinative documents in every
case -- and did not intend that the Department would provide a
factual summary of the evidence and an analysis of the law in
every settled case. The statute refers to "any other materials
and documents," not "the other" documents, which would be the

more natural term if Congress assumed that there would always be

such documents.
Private plaintiffs’ expansive interpretation of

"determinative document" makes little sense in light of the

limited purpose of a Tunney Act proceeding. Under the Tunney
Act, "the court is only authorized to review the decree itself,"

and is "not empowered to review the actions or behavior of the

give certain proposed interrogatories to a jury because they

related to matters of an evidentiary, rather than a
determinative, nature); Smith v. Smithway Motor XPress, Inc., 464
N.W.2d 682, 686 (Iowa 1990) (defining a "determinative factor" as
a reason that tips the scales decisively one way or the other).

22
Department of Justice." Microsoft, 56 F.3d at 1459. Moreover,
the government’s judgments in a Tunney Act proceeding are
entitled to deference. Id. at 1461. Thus, the district court in

Microsoft was held to have exceeded its authority, id. at 1459,

by requiring production of information concerning "the
conclusions reached by the Government" with respect to the

particular practices investigated, and the areas addressed in

settlement discussions. Id. at 1455. There is no reason to
assume that Congress intended to require the government to
disclose as "determinative" a broad range of materials relating
to issues that are not properly before the court in a Tunney Act
proceeding.

The legislative history of the Tunney Act supports this

reading of the statute. Congress enacted the Tunney Act in
response to consent decrees entered in 1971 in three cases
involving the International Telephone and Telegraph Corporation
(ITT). These cases challenged three ITT acquisitions, including
that of the Hartford Fire Insurance Company. The consent decrees

permitted ITT to retain Hartford. Subsequent Congressional

hearings revealed that the then-head of the Antitrust Division
had employed Richard J. Ramsden, a financial consultant, to
prepare a report analyzing the economic consequences of ITT’s
possible divestiture of Hartford. Ramsden concluded that
requiring ITT to divest Hartford would have adverse consequences
on ITT and on the stock market generally. Based in part on the
Ramsden Report, the Department concluded that the need for

23
divestiture of Hartford was outweighed by the divestiture’s
projected adverse effects on the economy.
The Ramsden Report, which falls squarely within the
government’s understanding of the statutory term, was cited by
the Act’s chief sponsor as exemplifying a "determinative
document." During the Senate debate on the determinative

documents provision, Senator Tunney expressly stated: "I am

thinking here of the so-called Ramsden memorandum which was
important in the ITT case." 119 Cong. Rec. 24,605 (1973). Had

Congress intended to reach more broadly, it could easily have

done so.10
Indeed, one witness during the hearings on the Tunney Act

specifically urged that "as a condition precedent to . . . the

entry of a consent decree in a civil case . . . the Department of
Justice be required to file and make a matter of public record a

detailed statement of the evidentiary facts on which the

complaint . . . . was predicated." Hearings, supra note 7, at 57

10
Broader language was readily at hand. Congress had before
it Senator Bayh’s S. 1088, a bill generally similar to Senator
Tunney’s bill, but which provided for the filing of "copies of
the proposed consent judgment or decree or other settlement and
such other documents as the court deems necessary to permit
meaningful comment by members of the public on the proposed
settlement." S. 1088, 93d Cong., lst Sess. § 2(a)(l)(B) (1973).
This language would have given the court discretion to require
disclosure of a broader range of materials relating to the
adequacy of the proposed decree than the formulation Congress
ultimately chose, limiting disclosure to documents or materials
that the United States considered determinative in formulating
relief.

24
(prepared statement of Maxwell M. Blecher, attorney). Congress,
however, rejected that recommendation.11
In enacting the Tunney Act, Congress recognized the "high

rate of settlement in public antitrust cases" and wished to

"encourage[] settlement by consent decrees as part of the legal
policies expressed in the antitrust laws." H.R. Rep. 93-1463 at
6. It wanted, however, to remedy any abuses in the consent
decree process -- the Tunney Act focuses judicial and public
scrutiny on "the Justice Department’s decision to enter into a

proposal for a consent decree." Id. at 7. The purpose of the

competitive impact statement, the public comment procedures, and
the requirement that the defendant reveal his "lobbying" contacts

with the government (15 U.S.C. 16(g)), are "to enable a court to
determine whether a proposed consent decree is in the ‘public
interest.’" Id. at 21. The provision requiring the government

to produce "determinative documents" reflects Congressional

concern, not with the strength of the government’s case against

11
The Department of Justice expressed concern that the
determinative documents provision could be read to require
extremely sweeping disclosure, chilling discussions within the
Antitrust Division and impeding access to information from
outside the Department. 119 Cong. Rec. 24,601 (1973) (letter
from Assistant Attorney General Kauper to Senator Javits).
Senator Javits introduced two amendments designed to meet the
Department’s concerns. In accepting these amendments, Senator
Tunney indicated that they "merely reaffirm[ed] existing law" and
were consistent with the Committee’s intent. 119 Cong. Rec.
24,605 (1973) (statement of Senator Tunney). Because the
amendments had incorporated references to the Freedom of
Information Act, the House Committee deleted them to ensure that
"Freedom of Information Act case law . . . was not disturbed."
H.R. Rep. No. 93-1463 at ll.

25
the defendants (to which evidentiary documents relate), but with
any inducements -- possibly improper -- that led the government
to settle a case on particular terms rather than litigate it.

See also Hearings, note 7 supra, at 4 (remarks of Senator Tunney)

(provision for public disclosure, including defendant’s lobbying
efforts, were "best guarantee of a sound decision" to settle a

suit). Seen in this light, it is not surprising that the

government did not have "determinative documents" in this case.
The only case on which private plaintiffs rely that gives
"determinative document" a more expansive reading -- United
States v. Central Contracting Co., 531 F. Supp. 133, 537 F. Supp.
571 (E.D. Va. 1982) -- has not been followed by any other court.

Indeed, of the approximately 150 antitrust consent decrees filed

since Central Contracting, the government filed "determinative"
documents or materials in only 20 of them.12 Despite ample

12
See e.g., United States v. Tele-Communications, Inc., 1996-
2 Trade Cas. (CCH) ¶ 71,496, at 77,619 (D.D.C. 1994) ("No
documents were determinative in the formulation of the proposed
Final Judgment. Consequently, the United States has not attached
any such document to the proposed Final Judgment."); accord
Motorola, 1996-1 Trade Cas. at 77,026; United States v. The LTV
Corp., 1984-2 Trade Cas. (CCH) ¶ 66,133, at 66,335 (D.D.C. 1984).

26
opportunities, no court has followed Central Contracting in
finding documents determinative even though they do not relate to
relief.13

B. Private Plaintiffs Are Not Entitled to Review the

Settlement Memorandum Under 15 U.S.C. 16(e)(2) and
16(f)(3)
Private plaintiffs also argue that the Court should order

production of the Settlement Memorandum pursuant to 15 U.S.C.

16(e)(2) and 16(f)(3). Section 16(e)(2) provides that, in making
the Tunney Act public interest determination, the Court may
consider "the impact of entry of such judgment upon the public
generally and individuals alleging specific injury from the
violations . . . including consideration of the public benefit,

if any, to be derived from a determination of the issues at

trial." Section 16(f)(3) provides that, in making the public
interest determination, the Court may "authorize full or limited
participation . . . by interested persons . . . including . . .
examination of witnesses or documentary materials, or
participation . . . as the court may deem appropriate."

Private plaintiffs claim that, because they are "individuals

alleging specific injury from the violations set forth in the
complaint" within section 16(e)(2), they are entitled to

13
In Central Contracting, moreover, the court acknowledged
that section 16(b) "does not require full disclosure of Justice
Department files, or grand jury files, or defendant’s files, but
it does require a good faith review of all pertinent documents
and materials and a disclosure of" those "materials and documents
that substantially contribute to the determination [by the
government] to proceed by consent decree . . . . " 537 F. Supp.
at 577.

27
"examination of documentary materials" under section 16(f). Pl.
Mem. 18. This interpretation ignores the additional pertinent
statutory requirements. Section 16(f)(3) authorizes the Court to
grant "interested persons" the right to examine "witnesses or
documentary materials" (just as it gives "interested parties" the
right to "intervene" or "appear [as] amicus curiae") only if that
participation will serve the "public interest."
As we discuss above in the context of intervention, such
participation would not serve the public interest here; indeed,

it would prolong the resolution of this case -- with no prospect

at all that direct involvement of the private plaintiffs in this
proceeding would enhance the Court’s ability to determine whether

entry of the proposed order is in the public interest.

Moreover, granting private plaintiffs the opportunity to
examine the government’s investigative files simply to identify

possible evidence that the defendants carried out the alleged

conspiracy through means other than the telephone (Pl. Mem. 24-
25), or to find out what evidence the Division had that might

have supported a provision in the proposed order that would have

required the settling defendants to implement certain quoting
rules recently proposed by the SEC (id. 26), would be a pointless
detour. As previously noted, cases are generally settled after
exhaustive negotiations, and "the agreement reached normally
embodies a compromise." Motorola, 1996-1 Trade Cas. at 77,026.

As a consent settlement need not be certain to eliminate every

anticompetitive effect of a particular practice or mandate the

28
certainty of free competition in the future to be in the public
interest (id.), it would be beside the point for the private
plaintiffs to review the government’s evidence for the purpose of
determining whether they might articulate some basis upon which
to suggest to the Court that the form of the proposed order be
tweaked in one direction or another to make it "more perfect."

Cf. IBM, 1995-2 Trade Cas. at 75,458; United States v. AT&T,

1982-2 Trade Cas. (CCH) ¶64,726, at 71,525 & n.7, 71,526 (D.D.C.
1982). Rather, the issue before the Court is merely whether the

relief "is within the reaches of the public interest."

Microsoft, 56 F.3d at 1460-61 (emphasis in original).
While "the Court may consider the interests of ‘individuals

alleging specific injury from the violations set forth in the

complaint’" (Pl. Mem. 18), that consideration is limited to "the
impact of entry of such judgment upon . . . [those] individuals

. . . including . . . the . . . benefit, if any, to be derived

from a determination of the issues at trial." 15 U.S.C. 16(e)(2)
(emphasis added). Again, as discussed in part I, above, entry of

the proposed order will have no impact upon plaintiffs’ private

suit. In fact, private plaintiffs are not claiming that the
proposed order should not be entered or that the government

should proceed to trial. They simply want alternative (and

duplicative) avenues of discovery for their private litigation.
In the absence of any adverse impact caused by entry of the
proposed order, the Tunney Act sections on which plaintiffs rely
simply do not provide for the relief they seek.

29
 Private plaintiffs complain that it would be "extremely
inefficient to require [them] to reinvent the wheel, rather than
build upon the government’s investigation." Pl. Mem. 22, also 16
(private plaintiffs want a "road map" for their private case).
This lament assumes that the Tunney Act’s purpose is to ease the
work of lawyers in private antitrust suits by giving them free
access to the fruits of the government’s investigation. This was
not Congress’ intent. Entry of the consent decree does not
protect from discovery in the private suit any materials that

would otherwise be discoverable to plaintiffs; nor, however, does

it purport to broaden or amend the rules governing civil
discovery. See also SEC v. Everest Management Corp., 475 F.2d at
1239 (intervention not aimed at assisting private plaintiffs who
seek to avoid duplication of agency’s investigative efforts).
Private plaintiffs rely on a portion of the legislative

history of the Tunney Act which suggests that a court may

conclude in particular cases that it is appropriate to "condition
approval of the consent decree on the Antitrust Division’s making

available information and evidence obtained by the government to

potential, private plaintiffs which will assist in the
prosecution of their claims." S. Rep. No. 93-298 at 6-7; accord

H.R. Rep. No. 93-1463 at 8. But had Congress thought courts

should routinely condition their approval in this way, it could
have simply required that the government make its evidentiary
files public. Congress imposed no such requirement. Indeed, the
Congress strictly limited disclosure of materials obtained under

30
the ACPA from defendants and other non-parties. See In re Nasdaq
Market-Makers Antitrust Litigation, 929 F. Supp. at 726; 15
U.S.C. 1313(c)(3).14 Certainly, a general expression in the

legislative history of some sentiment in favor of disclosure

cannot prevail over an express statutory prohibition on the
disclosure by the Department of information obtained pursuant to

CIDs.
Similarly, the information incorporated in the Settlement
Memorandum that the Department obtained from the SEC -- whose
investigation is continuing -- must remain confidential. See 17

C.F.R. 230.122; 17 C.F.R. 240.0-4; 44 U.S.C. 3510(b); Shell Oil

Co. v. Department of Energy, 477 F. Supp. 413, 420 (D. Del. 1979)
("Data immune from disclosure in the hands of a federal agency
acquiring data retains that protection in the hands of a

receiving agency after an inter-agency transfer.").

The Department insured that there would be no use of this
information except for settlement purposes by resticting access

to the Settlement Memorandum to a limited number of individuals,

none of whom were permitted to keep or copy any part of that
document. Moreover, each of these individuals had to agree in
writing to maintain strict confidentiality of the information

14
The legislative history to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, which added this provision to the ACPA,
explains that, with certain limited exceptions, "information
submitted pursuant to a CID will remain confidential, and will be
available to no one during the investigation except Division
attorneys, the CID recipient, his counsel, and under certain
circumstances, the FTC." H.R. Rep. No. 1343, 94th Cong., 2d
Sess. 15 (1976).

31
disclosed. To force public disclosure of such information simply
because it was previously disclosed in connection with settlement
efforts, and never disclosed in any other context, would forever
compromise the ability of government investigative agencies to
reach settlements in multi-party proceedings.
Private plaintiffs would be hard-pressed to argue that what
remains of the Settlement Memorandum -- the government’s legal
analysis of the proof required to establish an antitrust
conspiracy -- is relevant to plaintiffs’ private suit. See Fed.

R. Civ. P. 26(b)(1) (discovery provided for "relevant"

information only). Further, disclosure of the remaining portions
of the Settlement Memorandum would encroach upon a number of

established privileges and protections.15 See Jabara v. Kelley,

15
Because the Settlement Memorandum is a predecisional
deliberative memorandum prepared as an aid in reviewing and
making a decision on the government’s enforcement options, it
falls within the governmental deliberative process privilege.
NLRB v. Sears, Roebuck & Co., 421 U.S. 132, 150-52 & n.19 (1975);
Access Reports v. Dept. of Justice, 926 F.2d 1192, 1196 (D.C.
Cir. 1991); Weissman v. Fruchtman, 1996 WL 15669, at *13 (quoting
Mobil Oil Corp. v. Dept. of Energy, 102 F.R.D. l, 5 (N.D.N.Y.
1983)). Further, since the Settlement Memorandum was prepared
for the express purpose of negotiating a settlement, it is
protected from disclosure under the line of cases initiated by
Bottaro v. Hatton Associates, 96 F.R.D. 158, 159-60 (E.D.N.Y.
1982)(denying discovery of settlement agreement, inadmissible in
evidence under Fed. R. Evid. 408, in absence of particularized
showing of likelihood that disclosure will lead to discovery of
admissible evidence); accord, e.g., Weissman v Fruchtman, 1986 WL
15669 at *20 (S.D.N.Y. Oct. 31, 1986). Finally, because the
Settlement Memorandum is part of the government’s investigative
files, it is protected by the law enforcement investigative
privilege while the investigation is still pending and for a
reasonable time thereafter. See Three Crown Ltd. Partnership v.
Salomon Bros., Inc, 1993-2 Trade Cas. (CCH) ¶ 70,320, at 70,665-
66 (S.D.N.Y. 1993); Raphael v. Aetna Cas. and Sur. Co., 744 F.
Supp. 71, 74 (S.D.N.Y. 1990). Should the Court hold that the

32
75 F.R.D. 475, 481 (E.D. Mich. 1977) ("Of course, as a threshold
matter, the plaintiff has the burden of showing that the
information he seeks is relevant and material to the proofs of
his claims before the Court is even obligated to consider whether
defendants’ claims of privilege should be upheld in a particular
instance.").
Finally, routine disclosure of the materials private
plaintiffs seek would deter defendants from entering into
negotiated settlements with the government, and, perhaps, from

cooperating in investigations that are likely to lead to such

negotiations. Such a requirement "would thus, as a practical
matter [eliminate the consent decree] as an antitrust enforcement
tool, despite Congress’ directive that it be preserved." United
States v. American Telephone & Telegraph Co., 552 F. Supp. 131,
151 (D.D.C. 1982), aff’d mem. sub. nom. Maryland v. United

States, 460 U.S. 1001 (1983). The cost to antitrust enforcement,

particularly in an era of declining government resources, would
be substantial. Most of the government’s civil antitrust cases

are settled rather than tried. If more cases are required to be

litigated, fewer of them can be brought.
Private plaintiffs’ contention that the Court cannot

evaluate the effectiveness of the relief provisions of the

proposed order in the absence of giving plaintiffs access to the

Settlement Memorandum is a determinative document or producible

pursuant to 15 U.S.C. 16(e)(2) or 16(f)(3), the Department
requests the opportunity to fully brief these privilege issues.

33
Settlement Memorandum (Pl. Mem. 24) is specious. The CIS
("Competitive Impact Statement") gives the plaintiffs, the Court,
and the public in general, detailed and specific information
concerning the conduct uncovered by the Department in its
investigation. While the CIS does not disclose specific names
and dates and evidentiary details, such information is
unnecessary to enable the Court to evaluate the remedies proposed
in light of the nature of the allegations in the complaint.16
The CIS, as well as the complaint itself -- which sets forth the

violations alleged -- provides ample information to enable the

Court to determine whether the proposed order adequately remedies
the violations uncovered and alleged, and thus whether entry of

the proposed order is within the "reaches of the public

interest." See Microsoft, 56 F.3d at 1460 (court must look to
allegations in complaint, and only those allegations, to

determine whether remedies provided are adequate).

Private plaintiffs speculate that, "while the collusion has
taken place principally over the telephone," the Settlement
Memorandum "likely will reveal the mix of telephone calls,
computer messages, and other forms of communication that have
been (or could be) used to organize and enforce the market

16
Private plaintiffs are seeking such specifics, not to
advance the Court’s public interest determination, but to advance
their private suit by providing them with a "road map" of the
government’s evidence. Pl. Mem. 16 ("[T]he Competitive Impact
Statement itself . . . names no names. It therefore does not
provide a road map identifying witnesses who could be interviewed
or deposed.").

34
makers’ conspiracy"; private plaintiffs thus suggest that the
proposed decree remedies may be inadequate. Pl. Mem. 24-25.
This unsupported conjecture provides no basis for affording
plaintiffs broad access to the government’s files. First, the
CIS gives sufficient detail about the way in which the conspiracy
has operated to obviate the need for reviewing the Settlement
Memorandum in this regard. Although private plaintiffs speculate
that the Settlement Memorandum might reveal that the defendants
employed electronic means in addition to the telephone to further

their price-fixing conspiracy, even if true, private plaintiffs

do not need to examine the Settlement Memorandum to make the
point (as they are free to do in their public comments) that

audio-taping of telephone conversations cannot guarantee that

defendants will not attempt to fix prices through other means.
See Pl. Mem. 24-25. Similarly, the Court does not need "a full

evidentiary record . . . to evaluate the adequacy of the . . .

proposed Consent Decree" in failing to impose certain "quoting
rules" proposed by the SEC. Id. at 28, 26. The CIS amply
explains the Department’s reasons for not insisting that the
defendant implement those rules as a condition of settlement
(complexity involved in requiring less than all industry
participants to implement the rules, fairness concerns and the
pendency of the rules before the SEC). Only baseless speculation
suggests that examination of the Settlement Memorandum would shed

additional light on this explanation. In any event, since the

government’s complaint was filed, the SEC has enacted the

35
"quoting rules" that the Department supported (see 61 Fed. Reg.
48,290 (Sept. 12, 1996)), presumably mooting this issue.
III. THE COURT SHOULD REFUSE PRIVATE PLAINTIFFS’ REQUEST TO
MODIFY SECTION IV(C)(6) OF THE PROPOSED ORDER
Paragraphs IV(C)(2)-(6) of the proposed order require, as a
method of ensuring compliance with the terms of the decree, that
defendants randomly monitor and tape record not less than 3.5% of
their Nasdaq trader telephone conversations (up to a maximum of

70 hours per week), identify and produce any tapes containing

conversations that may violate the proposed order and furnish the
tape of any such conversation to the Antitrust Division within

ten business days of its recordation. Paragraph IV(C)(6)

specifically provides:
Tapes made pursuant to this stipulation and
order shall not be subject to civil process
except for process issued by the Antitrust
Division, the SEC, the NASD, or any other
self-regulatory organization, as defined in
Section 3(a)(26) of the Securities Exchange
Act of 1934, as amended.

Private plaintiffs claim that this provision should not be read

to preclude them or any other "future plaintiffs" from obtaining
access to the audio tapes. They ask "the Court [to] reject this

provision, or clarify that, by entering the Consent Decree, the

Court does not bind any non-party to the Consent Decree. . . . "
Pl. Mem. 30.
The Court should not reject or modify paragraph IV(C)(6).
In reaching the settlement in this case, the defendants agreed,
at the government’s insistence, to conduct random taping of their

36
traders’ conversations to enforce compliance with the proposed
order. In negotiating this unusually strict provision, the
government agreed to limit the use to which the tapes could be
put.17 Since the tapes would not even be created but for the
proposed order, the Court should accept the provision in the
proposed order preventing their use in private litigation. See

In re LTV Securities Litigation, 89 F.R.D. 595, 617-22 (N.D. Tex.

1981) (denying disclosure of documents prepared by Special
Officer appointed, in accordance with provisions of a consent

17
The disclosure and admissibility limitations of the
proposed order apply only to tape recordings created pursuant to
the proposed order. To the extent that defendants record trader
conversations for their own purposes, such recordings would not
be subject to the provision of paragraph IV(C)(6) limiting the
disclosure and admissibility of recordings "made pursuant to" the
proposed order. See also proposed order, paragraph IV(C)(8)
([u]pon request of the Antitrust Division, a defendant must
"immediately identify all tape recordings made pursuant to . . .
[the proposed] order that are in its possession or control
. . . ." (emphasis added). Further, as the proposed order
requires that a defendant "record (and listen to) not less than
three and one-half percent (3.5%) of the total number of trader
hours of such defendant" (paragraph IV(C)(4)) -- and to report
potential violations to the Antitrust Division (paragraph
IV(C)(5)) -- a defendant would have great difficultly "over
claiming" recordings not created pursuant to the proposed order.
If a recording was not actually "listened to" by the defendant’s
Antitrust Compliance Officer (or his staff) and a report of
potential violations made to the Antitrust Division, the
recording would not qualify as having been made pursuant to the
proposed order. The Department intends to ensure that each
defendant is capable of identifying immediately all tape
recordings made pursuant to the proposed order, and may insist
that the defendants provide a schedule of the recordings to be
made in advance of their creation. See proposed order, paragraph
IV(C)(8); see also paragraph IV(C)(3). In this way, it will be
clear what recordings have been made pursuant to the order and
should be in the firm's inventory.

37
decree, to investigate and report on defendant’s accounting and
auditing practices).
Moreover, no existing rights or interests of private
plaintiffs are implicated by this provision. Future audio tapes
may or may not prove to contain evidence relevant to antitrust
violations; certainly they are likely to have much information
that is irrelevant, confidential or otherwise protected from
disclosure. Nor do private plaintiffs have any particular
standing to redress the speculative grievances of potential

"future" victims. The private plaintiffs’ interest in this

regard is no greater than that of any other member of the public
who may comment on the decree. The Court should not grant

intervention to private plaintiffs to redress speculative wrongs

in conjectural "future litigation" by unknown future "injured
investors." See Pl. Mem. 15, 16. Should such future litigation

develop, the enforceability of this provision can be litigated by

parties with standing to press the issue.
Meanwhile, the Department plans, if the Court enters the

proposed order, to monitor the tapes carefully and, if evidence

of new or continuing violations comes to light, take appropriate
enforcement action. In addition, should violations of the

securities laws be indicated, the Department will refer such

evidence to the SEC, the NASD, or both.

38
 Conclusion
The motion to intervene, participate as amicus curiae, or
otherwise be permitted to discover documents or have the Court
alter the terms of the proposed consent decree should be denied.
Dated: October 2, 1996
Washington, D.C.
Respectfully submitted,

_____________________________
HAYS GOREY, JR. (HG 1946)
ANDREA LIMMER (AL 1552)
JOHN D. WORLAND, JR. (JW 1962)
JESSICA N. COHEN (JC 2089)

Attorneys
U.S. Department of Justice
Antitrust Division
600 E Street, N.W., Room 9500
Washington, D.C. 20530
(202) 307-6200 phone
(202) 616-8544 fax

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