Column: The Bumble Bee tuna price-fixing case could point to the future of white-collar prosecutions

The bluefin auction at Tokyo's Tsukiji fish market, where tuna is still a hot commodity.
(Toshifumi Kitamura / AFP/Getty Images)

When the roll call is sounded of business deals that looked like a good idea at the time but went massively wrong, special notice should go to the merger of the tuna packagers Bumble Bee and Chicken of the Sea, announced in late 2014.

The $1.5-billion deal would have created a canned tuna powerhouse commanding nearly half of the U.S. market, swamping StarKist, which at the time was the No.1 brand with 34.6%.

The deal never happened.

In conducting a routine antitrust review of the proposed deal, the Department of Justice unearthed what looked like a massive conspiracy among the three companies to fix canned tuna prices.


In the financial crisis, the DOJ decided it was massively easier to win by refusing to prosecute the senior folks.

— Former bank regulator William K. Black

The parent of Chicken of the Sea, a Thai company named Thai Union Group, promptly bailed out of the merger and fessed up to the Justice Department in return for amnesty from prosecution. Its deal requires it to cooperate with the government’s investigation of the other two companies.

Two top executives of San Diego-based Bumble Bee and an executive of StarKist pleaded guilty to federal price-fixing charges in 2016 and 2017 and turned state’s evidence; their sentencings have been deferred at least to Sept. 26, when their cooperation can be assessed. Bumble Bee pleaded guilty to price fixing last year and agreed to pay a fine of at least $25 million and as much as $81.5 million (the higher amount if the company is eventually sold).

So far, 78 civil lawsuits have been filed against the three tuna companies and consolidated into a single proceeding before federal Judge Janis Sammartino in San Diego. They fall into four categories: three class actions for groceries and wholesalers, consumers, and food preparers such as delicatessens; and a fourth group of big tuna buyers such as Walmart and Sysco.

The Justice Department says the alleged collusion lasted from 2011 at least through 2013; some civil plaintiffs say it continues to this day. The lawsuits don’t specify how much the companies allegedly squeezed from consumers by colluding. U.S. canned tuna sales, however, come to between $1.7 billion and $2 billion a year.

Then, on May 16, came the federal indictment of Bumble Bee’s longtime chief executive, Christopher Lischewski. The Lischewski indictment is what elevates the Bumble Bee investigation into a special category of white-collar crime cases, for he’s one of the rare CEOs to be brought to book in recent years for corporate wrongdoing. Lischewski maintains his innocence. “When the facts are known and the truth emerges,” says his San Francisco attorney, John Keker, “vindication will rightfully restore his good name.”


Before we examine what brought Lischewski and the tuna companies to the dock, let’s put the case in the context of federal white-collar prosecutions. To be blunt, they’re becoming an endangered species. According to the Transactional Records Access Clearinghouse, or TRAC, at Syracuse University, which compiles federal statistics, white-collar prosecutions have declined every year since 2011, when they peaked at more than 10,000. The April total of 494 new cases was down 14.4% from March and 31.3% from 10 years ago. They’re now at their lowest level in two decades, TRAC’s analysis shows.

This wouldn’t be a surprise to the white-collar defense bar. The Trump administration signaled, both overtly and subtly, a shift in emphasis away from corporate prosecutions and toward immigration cases, crimes of violence and drug crimes, according to an article in the New York Law Journal last February by white-collar defense attorneys Robert J. Anello and Richard F. Albert. Immigration charges have accounted for 53% of all federal prosecutions so far this year, according to TRAC, and drug charges an additional 32%.

Meanwhile, Anello and Albert observed, vacancies in key Justice Department divisions such as the criminal fraud section were going unfilled.

One vital question in corporate crime enforcement is who’s prosecuted, and that’s where the tuna case may stand apart. Over a period of years the Justice Department moved away from prosecuting individual executives in favor of extracting criminal pleas, fines and civil settlements from their corporations. That policy reached its climax in the aftermath of the 2008 financial crisis, when top executives of big banks seen to have defrauded investors and customers averted prosecution.

“In the financial crisis, the DOJ decided it was massively easier to win by refusing to prosecute the senior folks,” says William K. Black, a former bank regulator who brought cases in the 1980s against numerous individual executives in the wake of the savings & loan crisis. The result of the new policy, Black says, was to sap the government’s prosecutors of their power to deter future wrongdoing.

Presumably responding to criticism about executives going free, the Obama-era Justice Department issued a new policy in 2015 over the signature of then-Deputy Atty. Gen. Sally Q. Yates. The “Yates memo” stated that it would henceforth be a priority in corporate misconduct cases to seek “accountability from the individuals who perpetrated the wrongdoing.” Investigations should focus on individuals from the start, the memo said, and corporations wouldn’t get credit for cooperating with the government unless they fingered individual wrongdoers.

That was proper, Black says, because “almost invariably, white-collar crime comes from the top.” But it did complicate prosecutions. That’s because “individual responsibility in huge corporations can be very diffuse,” says Henry Pontell, a white-collar crime expert at John Jay College of Criminal Justice and UC Irvine. “It’s possible in a large organization that a CEO may not know who’s doing what.”

Moreover, “going after individuals is harder — they’ll put up a defense because they face real consequences,” Anello told me. By contrast, “companies look for ways to resolve cases.”

The individual guilty pleas in the tuna cases, experts say, suggest that the government must really have the goods. Certainly the circumstantial evidence is strong. According to the indictments and civil lawsuits, the three big processors had emerged from an era of ferocious competition for market share from 1985 to 1999, when more than half the canned tuna sold in the U.S. was subject to promotions that discounted prices by as much as 31%.

This was “an ‘unwinnable’ war” costing the industry $200 million a year, Lischewski said at the time, according to the class-action lawsuits. Starting soon thereafter, however, prices began rising. The lawsuits allege that officers of the three companies managed this by colluding to reduce standard can sizes to five ounces from six, raising the price per ounce.

The companies allegedly coordinated list price increases, sometimes announcing them within days of each other. And they jointly agreed to cut back on promotional discounts.

Artificially propping up prices was seen as especially important in the face of a marked slide in the per capita consumption of canned tuna. The trend was attributed to such consumer concerns as mercury in the fish and harm to dolphin populations caused by aggressive fishing.

The companies soon were signaling that profits were up, despite stagnant sales. Thai Union declared in its 2013 annual report, according to a class-action filing, that its results were showing “resilient growth” due to “more rational market competition in the U.S.” A year later, it noted the “absence of cut-throat pricing.”

How the prosecutions and the lawsuits will work out for the people at the top is hard to gauge. Bumble Bee indicates that Lischewski has been at least shunted aside for the moment: “Our board of directors will act swiftly to ensure continuity in the company’s leadership,” the company said the day of his indictment.

Lischewski deserves the presumption of innocence in court, but his efforts to dodge responsibility will be fascinating to watch. After all, his senior vice presidents of sales and of trade marketing have pleaded guilty to price-fixing, as did the company he has led as CEO since 1999. Could he not have known what was going on? His attorney calls him “a leader and beacon within the seafood industry for more than twenty-five years,” which makes him sound like a man who paid attention to what was happening around him.

As for government policy on white-collar crime, it appears to be evolving. The Yates memo hasn’t been withdrawn, though Deputy Atty. Gen. Rod Rosenstein said last year that some of its elements might warrant reconsideration. As recently as May 9, however, during an appearance at a New York gathering of white-collar defense attorneys, he reiterated its core principle that in white-collar cases “the primary question should be, ‘Who made the decision to set the company on a course of criminal conduct?’ Our investigations should focus on those individuals.”

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