Civil Antitrust Case Highlights Factors For An Adverse Inference In Civil Cases Based On Assertions Of The Fifth Amendment

In civil antitrust price fixing trial, trial court excludes evidence concerning the invocation of the Fifth Amendment Privilege Against Self-Incrimination by non-party witnesses after considering applicable factors, in In re: Urethane Antitrust Litigation (D. Kansas) (No. 04-MD-1616)

Criminal Cases: No Inference

In criminal cases, the Fifth Amendment Privilege Against Self-Incrimination bars any inference from a defendant’s decision not to testify or an earlier claim of the privilege. Model jury instructions inform the jury that no inference may be drawn. For example, in the Ninth Circuit, the trial court normally instructs the jury: "A defendant in a criminal case has a constitutional right not to testify. You may not draw any inference of any kind from the fact that the defendant did not testify." Manual Of Model Criminal Jury Instructions for the District Courts of the Ninth Circuit, § 3.3 (Defendant’s Decision Not To Testify) (2010 ed.); see also Carter v. Kentucky, 450 U.S. 288, 305 (1981) (“hold[ing] that a state trial judge has the constitutional obligation, upon proper request, to minimize the danger that the jury will give evidentiary weight to a defendant's failure to testify”).

Civil Cases: Permissive Inference

In contrast, in civil cases, the Supreme Court has held that "the Fifth Amendment does not forbid adverse inferences against parties to civil actions when they refuse to testify in response to probative evidence offered against them." Baxter v. Palmigiano, 425 U.S. 308, 318 (1976); see also Error In Excluding Evidence Of Civil Defendant’s Invocation Of The Fifth Amendment Privilege. While an adverse inference instruction is not automatic in civil cases, the trial court may permit one.

Urethane Civil Antitrust Case

A recent pretrial ruling in a consolidated, multi-district civil antitrust case presented the question whether to exclude the claim of the Fifth Amendment privilege (and a comparable German privilege) by seven former or current Bayer employees. The case involved allegations that defendant Dow Chemical Company (“Dow”) had participated in price-fixing conspiracies concerning urethane chemical products. Before trial, Dow moved to exclude the claim of the Fifth Amendment privilege by non-party witnesses. The case provides a useful illustration of how the issue is determined by a trial court. Ultimately, the jury returned a $400 million verdict for the plaintiffs.

LiButti Factors

The trial court applied the factors from LiButti v. United States, 107 F.3d 110, 121-24 (2d Cir. 1997), which “compiled a non-exclusive list of factors that have guided the courts in ruling on the admissibility of a non-party’s Fifth Amendment invocation in a civil case.” As the Second Circuit noted these factors:

1. The Nature of the Relevant Relationships: While no particular relationship governs, the nature of the relationship will invariably be the most significant circumstance. It should be examined, however, from the perspective of a non-party witness' loyalty to the plaintiff or defendant, as the case may be. The closer the bond, whether by reason of blood, friendship or business, the less likely the non-party witness would be to render testimony in order to damage the relationship.

2. The Degree of Control of the Party Over the Non-Party Witness: The degree of control which the party has vested in the non-party witness in regard to the key facts and general subject matter of the litigation will likely inform the trial court whether the assertion of the privilege should be viewed as akin to testimony approaching admissibility under Fed. R. Evid. 801(d)(2), and may accordingly be viewed, as in Brink's, as a vicarious admission.

3. The Compatibility of the Interests of the Party and Non-Party Witness in the Outcome of the Litigation: The trial court should evaluate whether the non-party witness is pragmatically a noncaptioned party in interest and whether the assertion of the privilege advances the interests of both the non-party witness and the affected party in the outcome of the litigation.

4. The Role of the Non-Party Witness in the Litigation: Whether the non-party witness was a key figure in the litigation and played a controlling role in respect to any of its underlying aspects also logically merits consideration by the trial court.

Whether these or other circumstances unique to a particular case are considered by the trial court, the overarching concern is fundamentally whether the adverse inference is trustworthy under all of the circumstances and will advance the search for the truth.

LiButti, 107 F.3d at 123-24.

Factors Applied

In applying these factors, the trial court concluded that the first factor (“the nature of the relationship between the non-party witness who has invoked the Fifth Amendment and the party against whom the evidence is offered”) “weigh[ed] against admission of this evidence” as the witnesses did not have a relationship with Dow at the time the privilege was asserted and the allegation that Dow and Bayer conspired did not provide a “reason to believe that these witnesses would feel any particular loyalty to Dow many years after the end of the alleged conspiracy and Bayer’s own settlement with plaintiffs.” Urethane Antitrust Litigation, slip op., at 3. The second factor (concerning the degree of control) militated against admission based on the plaintiffs’ concession “that Dow did not exercise any control over these witnesses at the time they invoked these privileges.” Id. at 3-4. The third factor (concerning “the compatibility of the interests of the non-party witness and the party in the outcome of the civil litigation”) also supported exclusion of the evidence given the absence “that these witnesses have any actual interest in the outcome of the claims against Dow,” the Bayer settlement and closed government investigation. Id. at 4. The fourth factor (regarding “the role of the non-party witness in the civil litigation”) was neutral since the court could not conclude “that these witnesses played the controlling roles.” Id. at 4-5. Finally, the court explained why it determined that an adverse inference was not appropriate in the case:

[U]nder all of the circumstances, such an adverse inference is not trustworthy in this case and would not advance the search for truth regarding whether a conspiracy existed. First and foremost, these witnesses could reasonably have based their decisions to invoke the privilege on any number of factors other than to avoid admitting to the conspiracy alleged here. Indeed, as Dow points out, the direct action plaintiffs have supplied one such possible motive in their brief, in which they suggested that the “practical effect of this joint representation [of all former Bayer employees by one law firm] was that none of the witnesses could testify lest they implicate each other and create a conflict for [the law firm].” Moreover, these witnesses did not merely refuse to answer questions related to pricing discussions and agreements with Bayer’s competitors; rather, they invoked the Fifth Amendment in response to virtually every question, including seemingly innocuous questions such as those seeking to confirm their employment by Bayer during the alleged conspiracy period. Accordingly, there is little basis for the inference that these witnesses would necessarily have testified against Dow’s interests specifically with respect to issues relevant in this case.


The Court further concludes that any minimal probative value of the witnesses’ invocation of the Fifth Amendment is substantially outweighed by the danger of unfair prejudice to Dow from admission of such evidence and jury confusion. In particular, it would unduly prejudice Dow if the jury were allowed to infer that the witnesses took the Fifth to avoid admitting to the existence of a conspiracy, and that a conspiracy therefore existed, when such an inference would not be proper or trustworthy under all of the circumstances. A lay person sitting on a jury is likely to read far more into such an invocation than is justified under the complicated set of circumstances that led to it. Moreover, as the Second Circuit noted above, once the witness’s intent to invoke the privilege is known, counsel has the opportunity to craft his questions—and in essence, testify for the deponent—in the most damaging and even unfair way, without fear that false assumptions or unfair characterizations will be corrected by the witness. See id. A review of the questions posed to these witnesses suggests that such artful crafting of questions occurred here. Thus, in light of the witnesses’ broad invocation of the privilege in this case, Dow would suffer unfair prejudice from plaintiffs’ ability to offer, in essence, their own testimony in the guise of deposition questions. In addition, if such evidence were admitted, Dow would be entitled to attempt to explain to the jury, including through additional evidence, why the invocation of the privilege does not necessarily lead to the negative inference asserted by plaintiffs, and such efforts would undoubtedly cause at least some confusion in the jury and unnecessarily delay the proceedings.

For all these reasons, the Court concludes that the evidence proffered by plaintiffs that these witnesses invoked the Fifth Amendment privilege against self-incrimination should be excluded, pursuant to Fed. [Evid. R.] 402 and 403.

For the same reasons, the Court excludes evidence of the invocation by some of the these witnesses of a privilege against self-incrimination under German law. The negative inference sought by plaintiffs is the same, and there is no basis for a result different from that reached with respect to the Fifth Amendment privilege.

Urethane Antitrust Litigation, slip op., at 6-9.

The Urethane Antitrust Litigation provides a recent illustration of how a trial court would consider whether to admit evidence of a Fifth Amendment claim by non-party witnesses.

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