Defeating the Odds: A Single Victory Against 48 Concessions
In November 2017, Taft defeated the U.S. Department of Justice’s claims that its clients, a Japanese auto parts manufacturer and its U.S. subsidiary, conspired with others to fix prices and rig bids for automotive body sealing products. Taft, alongside co-counsel from Barnes & Thornburg, represented Tokai Kogyo Co. Ltd., a Japanese company, and its U.S. subsidiary, Green Tokai Co. Ltd., in this rare, high-stakes criminal antitrust case. Taft utilized its depth of international experience and knowledge of antitrust laws to navigate its clients through an extensive investigation and prosecution, and then created a strategic plan to defend its clients during the 13-day jury trial.
Through a nuanced understanding of Japanese business culture, Taft and co-counsel were able to turn the government’s witnesses into witnesses for the defense and prove that an “agreement” is a very different concept in the United States and Japan. This resulted in a jury verdict finding both companies not guilty of Sherman Act violations.
Beginning around 2009 and continuing for a decade, the Department of Justice’s Antitrust Division investigated the automotive parts industry, obtaining convictions of 48 companies and 65 executives, with criminal fines exceeding $2.9 billion. As part of this investigation, Tokai and Green Tokai were indicted for allegedly violating Section One of the Sherman Act (15 USC §1), by agreeing with two of its competitors to fix prices and rig bids for automotive body sealing products sold to Honda from 2008 to 2011.
Similar charges were also brought against the two competitors with whom Tokai and Green Tokai allegedly colluded. Both competitors pled guilty and agreed to cooperate with the government by sending their employees – including those who live in Japan – to testify against Tokai and Green Tokai. Even though the cooperating competitors would pose a significant problem at trial, Tokai and Green Tokai insisted that they had done nothing wrong, and were not willing to concede. The case proceeded to trial, where a conviction would likely result in hundreds of millions of dollars in fines.
Taft in Action
Taft swiftly prepared Tokai and Green Tokai’s trial defense. Taft and co-counsel conducted mock trials, gathered hundreds of company documents and data, and prepared to call as many as 10 witnesses to the stand. One of the unique challenges posed while preparing this case for trial was the foreign language barrier. Working with interpreters can often be an arduous process, and Taft correctly predicted that these same difficulties would present at trial, where many of the government’s witnesses only spoke Japanese. Taft understood the extensive translation of witness testimony and documents would dramatically slow the pace of courtroom proceedings, and, at times, cultural nuances would not be accurately captured by interpreters. By foreseeing these difficulties, Taft was able to tailor its witness examinations to make an effective and engaging presentation to the jury.
Taft also worked with its clients to understand how cultural nuances and long-held Japanese business practices were integral to the outcome of the case. In applying its knowledge of Japanese customs to translated testimony and documents, Taft discovered that the government misunderstood Japanese culture and the relationship between Tokai and its buyers, casting a cloud of confusion over the government’s case. With the knowledge of this misunderstanding, defense counsel was able to use cross-examination to turn the government’s witnesses into witnesses for the defense. By the end of the government’s case-in-chief, Taft and fellow trial lawyers had completely disproved the government’s theory and chose not to call a single defense witness to the stand.
By taking the time to accurately translate the evidence and understand how that evidence should be viewed given the cultural differences, Taft was able to not only defend against the government’s accusations, but to affirmatively prove that Tokai and Green Tokai had engaged in competitive pricing after all.
Results & Impact
After less than four hours of deliberation, the jury returned a unanimous defense verdict and Tokai and Green Tokai were cleared of all charges.
Tokai and Green Tokai were the first companies in the automotive parts industry to be indicted and tried by the Department of Justice in its long-running investigation of this industry. The other 48 companies charged acknowledged the vast amount of resources available to the federal government and settled through guilty pleas. With Taft’s assistance, Tokai and Green Tokai stood their ground and were able to avoid the fate of their competitors. By trusting Taft to guide them through the risky trial, Tokai and Green Tokai were absolved of any wrongdoing, and they escaped reputational and financial harm that would have ruined the companies.
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