Companies That Cooperate in DOJ Probes Should Also Guard Autonomy

Much ink has been spilled about a Foreign Corrupt Practices Act federal criminal prosecution hurtling towards trial this fall in Newark, N.J.

The indictment of Cognizant Technology Solutions Corporation’s president Gordon Coburn and general counsel Steven Schwartz in United States v. Coburn revolves around an alleged $2.5 million bribe paid to Indian officials in exchange for the approval of a planning permit for a corporate facility in eastern India.

The allegations aren’t unique or particularly salacious, but the case has received significant coverage because of the court’s willingness to hold a two-day evidentiary hearing entertaining the defendants’ motions to suppress pursuant to Garrity v. State of N.J. There, the Supreme Court held that the government can’t compel employees to sit for an interview by threatening to terminate them and then use statements made during the coerced interview in a later criminal prosecution.

Nearly 60 years later, the landmark ruling is potentially applicable because the holding has been extended, in cases like United States v. Connolly, to private employers when their conduct can be fairly attributed to the government.

Question

During the highly contentious April hearing in federal court, the court had to determine if the outside law firm functionally served as an arm of the government when it carried out the company’s alleged “internal” investigation, which involved the defendants sitting for interviews under the threat of termination.

Coburn and Schwartz, facing incarceration, desperately claimed that the company trampled on their constitutional rights as it sought to earn cooperation credit from the government and avoid a crippling indictment.

Ruling

Fortunately for the government and in-house legal departments, the court denied the defendants’ last-ditch suppression motions. The alternative would have significantly complicated the future of internal investigations and, by extension, Department of Justice corporate criminal prosecutions.

The court acknowledged that critical government policies—here, the Yates Memo and FCPA Pilot Program—incentivized Cognizant to cooperate, paving the way for an invaluable declination of prosecution. Nonetheless, the company’s desire to avoid prosecution didn’t automatically transform its investigation into government action.

Lessons for In-House Counsel

The factual findings underpinning the court’s holding offer valuable lessons for in-house counsel intent on avoiding a costly Garrity hearing in the future. Keeping in mind the following, counsel can aim to avoid performing the government’s job and becoming an arm of the state in the process.

Refrain from doing the government unnecessary favors and be prepared to push back.
In-house and outside counsel must collaborate closely to ensure they can differentiate between routine requests to be fulfilled in pursuit of cooperation credit and extraordinary demands that may jeopardize their independence.

The government will expect counsel to facilitate interviews with company employees and highlight “hot docs” to avoid sifting through a resource-draining data dump. But the government may also go a step too far, and counsel should be prepared to push back forcefully against unreasonable requests.

The Coburn court, for example, took issue with counsel aiding the government’s efforts to identify an expert on Indian contracting processes. Yet counsel were credited for their refusal to check in before showing witnesses documents they had not previously seen and for declining to elaborate on the rationale behind their privilege log determinations.

Monitor the status of the government’s own independent investigation.
Counsel has no authority over the government and limited tools to influence regulatory action. In-house and outside counsel understandably want to be adequately prepared prior to the initiation of the government’s examination.

Nonetheless, the Coburn court, which found that the government didn’t outsource its investigation, and the Connolly court, which held that it did, both went to great lengths to emphasize the affirmative investigative steps, or lack of, taken by the government.

Although it may be counterintuitive, counsel who uncover criminal conduct should consider nudging the government off the sidelines. The Coburn court explicitly contrasted the Connolly government’s three-and-a-half-year absence with the government’s more reasonable five-month delay.

In the former, the DOJ failed to use the early years to conduct a substantive parallel investigation, whereas in the latter, the DOJ took full advantage of the initial months to analyze documents, issue subpoenas and preservation notices, and gather additional information.

Don’t just maintain independence—create a record.
Unlike in Coburn, the parties won’t always be represented by experienced prosecutors and outside counsel well-versed in conducting internal investigations. In-house counsel are unlikely to participate in every interaction between the parties. Therefore, they need to ensure that outside counsel prod regulators into openly reaffirming the company’s independence.

In Coburn, the court applauded the DOJ for not asking outside counsel to interview specific witnesses or raise certain questions, and for explicitly stating that termination decisions resided with the company. In the absence of unambiguous line drawing, counsel need to elicit such strong statements from the government.

To help preserve the record, company counsel can also partner with the business and other members of the law department to take steps in support of myriad reasons for conducting an internal investigation, such as potential employment litigation and shareholder derivative suits that are wholly disconnected from the pursuit of a declination.

Takeaway

Common sense prevailed in Coburn, and companies will be able to carry out internal investigations to protect their shareholders and root out corruption, while the DOJ won’t be hindered in its pursuit of justice and individual criminal accountability.

In the process, the court outlined a helpful roadmap for how in-house and outside counsel, especially former federal prosecutors, can avoid being accused of blindly following the government’s marching orders.

The cases are Garrity v. New Jersey, U.S., 8/6/67, United States v. Coburn, N.J. Dist. Ct., 4/17/23, and United States v. Connolly, C.C.S.D.N.Y., 5/2/19.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Adam Yoffie is senior corporate counsel in litigation and government investigations at Bristol Myers Squibb.

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