IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA,
LSL Biotechnologies, Inc.
1200 N. El Dorado Place, #D-44
Tucson, AZ 85715,
| Civil Action No.________
Petition to Enforce Civil Investigative Demand
The United States of America and Joel Klein, Assistant Attorney General
of the Antitrust Division of the United States Department of Justice,
by the undersigned attorneys, hereby petition this Court, pursuant to
the Antitrust Civil Process Act, 15 U.S.C. § 1314(a) (1994), to
enter judgment on the pleadings enforcing Civil Investigative Demand
("CID") No. 17420, which was duly issued and served on LSL Biotechnologies,
Inc. ("LSL"), and as grounds state as follows:
- This is a proceeding brought pursuant to the Antitrust Civil Process
Act, 15 U.S.C. § 1314(a), to judicially enforce a Civil Investigative
Demand ("CID") served upon the Respondent.
- In enacting and amending the Antitrust Civil Process Act ("ACPA"),
15 U.S.C. §§1311 et seq. (1994), Congress provided
the Antitrust Division (the "Division") with broad pre-complaint powers
to investigate possible violations of the federal antitrust laws.
More specifically, ACPA 15 U.S.C. §1312(a) (1994), empowers the
Attorney General and the Assistant Attorney General in charge of the
Antitrust Division to issue a CID to any person who they have reason
to believe "may be in possession, custody, or control of any documentary
material, or may have information, relevant to a civil antitrust investigation."
Such a CID may require the recipient "to produce such documentary
material for inspection and copying or reproduction, to answer in
writing written interrogatories, to give oral testimony . . . , or
to furnish any combination of such material, answers or testimony."
- The Respondent, LSL Biotechnologies, Inc.("LSL"), is located at
1200 N. El Dorado Place, #D-44, Tucson, Arizona 85715, and transacts
business in Arizona.
- The Division is currently conducting an investigation into possible
violations of the Sherman Antitrust Act, 15 U.S.C. §§ 1
and 2, namely the possible restraint or monopolization of domestic
and international markets for long-shelf-life tomato seeds by, among
others, LSL. This investigation is focusing on provisions in agreements
between LSL and an Israeli seed company named Hazera (1939) Ltd. ("Hazera")
that permanently prevent Hazera from competing in the research, development,
and manufacturing of long-shelf-life tomato seeds.
- As part of this investigation, the Division requested that LSL voluntarily
provide information regarding the agreements and any intellectual
property rights LSL may have in long-shelf-life tomato seeds. This
information was requested in July 1997.
- At that time, LSL was represented by Yerushalmi and Associates.
Despite numerous telephone conversations and letters to counsel for
LSL, and assurances by counsel that LSL would respond, several months
passed, and LSL did not provide the information requested.
- On December 10, 1997, the Division issued a CID compelling Respondent
LSL to produce documentary material and to answer interrogatories
by December 29, 1997. A copy of the CID and attached schedule is attached
hereto as Exhibit 1 and incorporated herein as part of this petition.
The CID demands, inter alia, that LSL produce the following
types of information: financial statements and annual reports, documentation
of all claimed proprietary rights, and explanations of the no-compete
provisions under investigation.
- Shortly before the December 29 due date, Marc Leve, Esq. of Yerushalmi
and Associates, told the Division that the LSL had specially retained
the law firm of Collier, Shannon, Rill & Scott for this matter.
Consequently, the Division agreed to extend the due date for LSL's
response to the CID until January 20, 1998, to allow the attorneys
at Collier, Shannon, Rill & Scott the opportunity to familiarize
themselves with the issues. A copy of the letter reflecting that extension
is attached hereto as Exhibit 2 and incorporated herein as part of
- Following a request by the attorneys from Collier, Shannon, Rill
& Scott, the Division agreed to further extend the deadline for
LSL's compliance from January 20, 1998 to January 26, 1998. The Division
also limited the required production to a response to Interrogatories
9 and 12. All other documents and responses were temporarily deferred.
The Division sent a letter to this effect on January 15, 1998. A copy
of that letter is attached hereto as Exhibit 3 and incorporated herein
as part of this petition.
- LSL did not comply with the CID, even as substantially limited,
by the January 26, 1998 due date. Therefore, on January 28, 1998,
the Division sent a letter to LSL's attorneys demanding full compliance
with all specifications of the CID by February 17, 1998. This letter
detailed the efforts undertaken by the Division, over six months,
to obtain the information sought from LSL, first on a voluntary basis,
and then pursuant to the CID. A copy of that letter is attached hereto
as Exhibit 4 and incorporated herein as part of this petition.
- On February 5, 1998, in anticipation of a meeting with LSL's counsel
to attempt to resolve this matter, the Division agreed to toll the
20 days given to LSL to fully comply with the CID. This agreement
extended the deadline for full compliance to February 25, 1998. A
letter reflecting this extension is attached hereto as Exhibit 5 and
incorporated herein as part of this petition.
- Despite the meeting with LSL's counsel, the matter was not resolved.
LSL did respond to interrogatories 9 and 12, but, on February 25,
1998, LSL failed to produce the remainder of the requested material.
- On March 9, 1998, in a telephone conversation with Markus Meier,
Esq. of Collier, Shannon, Rill & Scott, the Division stated it
intended to visit LSL's offices, as permitted by the Antitrust Civil
Process Act, 15 U.S.C. § 1313(b), to inspect the responsive files.
Mr. Meier assured the Division that would not be necessary, and promised
that by March 11, 1998, LSL would tell the Division the locations
of the materials responsive to the CID and provide a timetable for
LSL's production. Mr. Meier further promised that as to one of the
CID specifications, which only asked for documents filed in a case
LSL had litigated, the Division would receive the materials by March
16 at the latest.
- On March 16, 1998, having not received any responsive material or
the promised timetable for compliance from LSL, the Division sent
LSL a letter stating that Division investigators would travel to those
sites it had been informed contained non-privileged, responsive documents,
namely New York, where a LSL director was located, and Arizona, LSL's
principal place of business, to inspect the documents located at those
sites. A copy of that letter is attached hereto as Exhibit 6 and incorporated
herein as part of this petition.
- In a series of telephone conversations on March 17 and 18, 1998,
LSL asked for a postponement of the inspection and more time to comply.
The Division eventually stated that it would postpone its inspection
on the 19th, but only if the attorneys from Collier, Shannon, Rill
& Scott, rather than LSL's employees, conducted the search for
the responsive materials. LSL would not agree to that proposal unless
Joseph Yerushalmi, a director of LSL and the name partner of Yerushalmi
and Associates was present to supervise the search and make the decision
as to which materials to produce. Mr. Yerushalmi, however, would not
make himself available to supervise the search and production for
three weeks. Since LSL employed or retained others who could just
as easily direct the Collier, Shannon, Rill & Scott attorneys
to the appropriate files and make sure that they did not breach their
client's confidences, the Division would not agree to any further
delay based on Mr. Yerushalmi's lack of trust in LSL's other counsel.
- Later, on March 18, 1998, attorneys at Collier, Shannon, Rill &
Scott told the Division that they no longer represented LSL. The Division
then sent a letter to Mr. Yerushalmi reminding him that Division investigators
would arrive in New York on March 19, 1998 to inspect those responsive
documents located there.
- When the Division investigators arrived in New York, Mr. Yerushalmi
was present despite the fact that Division attorneys had been informed
that he would be unavailable until April 5. Mr. Yerushalmi did not
have the responsive materials available for inspection and refused
to allow the investigators to search for responsive materials. Moreover,
Mr. Yerushalmi stated that the investigators would waste their time
traveling to LSL's headquarters in Tucson, Arizona because LSL would
not allow them to inspect any materials there. The investigators were
given a handful of documents that had been filed in other lawsuits,
but their efforts to inspect all other responsive materials located
in the office were rebuffed.
- Soon after the events described above, the Division was informed
that the law firm of Wilmer, Cutler & Pickering had been retained
to represent LSL.
- In the six weeks that Wilmer, Cutler & Pickering has been representing
LSL, LSL has not responded to any more of the twenty-one interrogatories,
has partially complied with four of the nine document requests, and
has not complied at all with the other five document requests.
- The documents sought by CID No. 17420 are not already in the possession
of the United States, are relevant to a valid investigation, and are
not exempt from disclosure. LSL sought to stall the production of
responsive documents for several months, refused (except for the two
interrogatories and the materials filed in other courthouses) to make
the materials available for inspection, and has so far failed to produce
all of the materials demanded by CID No. 17420.
- LSL's continuing failure to comply with the CID has impaired the
Division's ability to obtain documentary material and information
needed to complete in a timely manner the investigation described
in this Petition.
- To the extent that LSL has legitimate interests in preserving the
confidentiality of documentary material and information required by
the CID, those interests are adequately protected by the express restrictions
against disclosure embodied in the Antitrust Civil Process Act, 15
U.S.C. §§ 1313(c)(3) & 1314(g).
WHEREFORE, the United States and Joel Klein respectfully request that
- Order LSL Biotechnologies, Inc. to comply with the requirements
of CID No. 17420 within fourteen days of the Court's Order;
- Assess against LSL Biotechnologies, Inc. all costs of the United
States in maintaining this action; and
- Grant such other and further relief as is just and proper.
John R. Read
Tracey D. Chambers
United States Department of Justice
325 Seventh Street, N.W., Suite 500
Washington, D.C. 20530
May 7, 1998