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A Message from Lockridge Grindal Nauen P.L.L.P.

A Conspiracy of Note (and your withdrawal should be too)


While Hollywood has elevated some conspiracies to infamy (see http://www.imdb.com/video/screenplay/vi3309371929/), in real life it isn’t uncommon for conspiracy participants to claim that while they might have attended meetings where inappropriate (and illegal) topics were discussed and agreed upon, they didn’t really participate in the conspiracy.

The recent Supreme Court’s ruling in Smith v. United States, 568 U.S. ___, 133 S.Ct. 714 (2013) is a reminder of what must be done to withdraw from a conspiracy and provides a newly clear standard on who bears the burden of showing a conspiracy participant really withdrew. Smith resolved a circuit split to conclude that, in the criminal context, the defendant bears the burden of proving their withdrawal from a conspiracy. See http://www.supremecourt.gov/opinions/12pdf/11-8976_k5fl.pdf

It has always been the rule that a participant in a conspiracy retains membership in the conspiracy until he or she withdraws. Defendants who withdraw from a conspiracy have a complete defense to criminal prosecution and civil liability after withdrawal. But now the Supreme Court has concluded that, at least in the criminal context, the defendant bears the burden of proving their withdrawal. 133 S.Ct. 714 (2013).

Smith is instructive in an antitrust context. First, it is unequivocally the case that conspiracy withdrawal is an affirmative defense in the civil context. Withdrawing from a conspiracy does not negate that a defendant participated in a conspiracy; it merely excuses post-withdrawal conduct from liability. As the Court indicated in Smith, a “complete defense, however, is not necessarily one that establishes the defendant’s innocence.” Id. at 719-20.

Second, differing circuit decisions made application of withdrawal-related case law difficult. Smith makes clear that the burden of proof of withdrawal is now squarely on the defendant once it is established that a defendant is a conspiracy participant. This is consistent with the precept that evidence of participation in an antitrust conspiracy creates a presumption that said conspirator continued to participate in the conspiracy throughout its course. See Armco Steel Co. v. CSX Corp., 790 F.Supp. 311, 322 (D.D.C. 1991). The Smith rule aligns the burdens for both the civil and criminal antitrust defendants.

Third, as the trial judge instructed in Smith, “withdrawal must be unequivocal.” Smith provides a reminder to conspirators that, in order to avoid liability, they must immediately take affirmative action, and must, at the least, communicate their decision to withdraw to their co-conspirators, and consider other necessary affirmative steps. “Passive nonparticipation in the continuing scheme is not enough to sever the meeting of minds that constitutes the conspiracy.” 133 S.Ct. at 720. Smith is an instructive reminder that evidence of partial withdrawal or the ongoing receipt of conspirator benefits indicate a defendant’s failure to prove effective withdrawal, and are ineffective to negate liability for participation in an antitrust conspiracy.

Although Smith has yet to be applied specifically in the antitrust context, it provides valuable guidance. Circuits using the opposite rule will have to change their rulebooks—like the Seventh Circuit has already done with its jury instruction guide —and practitioners should be aware that more changes may be on the way to account for the ruling in Smith.

Materials in this article are provided for informational purposes only and do not constitute legal advice. If you have questions or wish to discuss antitrust issues further contact Heidi Silton. http://locklaw.com/profile_hmsilton.html

Heidi M. Silton was recently named a Top 50 Women Minnesota Super Lawyer. She is a partner at Lockridge Grindal Nauen in Minneapolis where she represents businesses in complex litigation. Ms. Silton is a frequent writer and speaker on antitrust issues and issues related to women in the law.

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