PRIVILEGED & CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
555 California Street, 40th Floor San Francisco, California 94104
Telephone: (415) 392-7800 Facsimile: (415) 392-7801 www.calderwoodharkness.com
Elaine Forsythe Partner Antitrust & Competition Practice Group Direct Dial: (415) 392-7843 Direct Fax: (415) 392-7844 eforsythe@calderwoodharkness.com
April 15, 2023
Via Email and U.S. Mail
Denise Kowalski Trial Attorney Antitrust Division, San Francisco Field Office U.S. Department of Justice 450 Golden Gate Avenue, Room 10-0101 San Francisco, California 94102
Re: Proffer Session of Thomas Eriksen — Grand Jury Investigation No. GJ-22-0194 (N.D. Cal.) / In re Specialty Minerals Price-Fixing Investigation
C&H Matter No.: 1039-00001
Dear Ms. Kowalski:
I. Purpose and Introduction
This letter is written on behalf of our client, Torchlight Mining Corp. ("TMC"), in connection with the grand jury investigation captioned above, Grand Jury No. GJ-22-0194, pending before the United States District Court for the Northern District of California, San Francisco Division (the "Investigation"). We write to memorialize the agreed-upon terms and conditions that will govern the voluntary proffer session of Thomas Eriksen, Regional Sales Manager, Western Region, U.S. Specialty Minerals Division, Torchlight Mining Corp., currently scheduled for April 22, 2023 (the "Proffer Session").
As you are aware, TMC has been cooperating voluntarily with the Antitrust Division in this matter since the earliest stages of the Investigation. This cooperation has included, among other things, the submission of TMC's cooperation proffer on February 15, 2023, the production of extensive documentary materials responsive to grand jury subpoenas, and the successful completion of the voluntary proffer session of Sandra Chu, Director of Pricing Analytics, U.S. Specialty Minerals Division, TMC, which took place on March 10, 2023, under substantially similar terms and conditions. Mr. Eriksen's voluntary proffer is a continuation of TMC's good-faith cooperation with the Division.
The Proffer Session is being offered on a voluntary basis as part of TMC's ongoing cooperation with the Antitrust Division. This letter sets forth the agreed-upon terms and conditions governing Mr. Eriksen's proffer session, commonly referred to as a "queen-for-a-day" agreement (the "Agreement"). We respectfully request that the Division confirm its agreement to these terms by countersigning a copy of this letter and returning it to us in advance of the scheduled Proffer Session date, as further described in Section XI below.
II. Identification of the Witness
The witness who will appear for the Proffer Session is Thomas Eriksen. Mr. Eriksen's relevant identifying information and background are as follows:
Full Name: Thomas Eriksen
Title: Regional Sales Manager, Western Region, U.S. Specialty Minerals Division, Torchlight Mining Corp.
Employment Status: Mr. Eriksen is currently employed by TMC and has held his current position since approximately March 2015. He reports to the Vice President of U.S. Specialty Minerals Sales within TMC's U.S. Specialty Minerals Division.
Relevant Background: During the period under investigation — approximately January 2017 through August 2021 (the "Relevant Period") — Mr. Eriksen attended certain quarterly conferences organized by the North American Specialty Minerals Council ("NASMC"). The Division has identified these NASMC quarterly conferences as occasions where coordination among competitors in the specialty-minerals sector may have occurred. Mr. Eriksen's attendance at these events, and his interactions with personnel from other companies in the industry at or around those events, are among the matters that the Division has indicated it wishes to explore during the Proffer Session.
Counsel: Mr. Eriksen will appear at the Proffer Session accompanied by counsel from Calderwood & Harkness LLP, specifically the undersigned, Elaine Forsythe, and/or Aaron Liu, Lead Associate in the firm's Antitrust & Competition Practice Group.
III. Scope of the Proffer Session
It is our understanding, based on discussions between counsel for TMC and the Division, that the Proffer Session will concern the Division's investigation into suspected violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, involving alleged price-fixing, market allocation, and bid-rigging in the North American specialty-minerals sector. The products principally at issue in the Investigation include high-purity feldspar, industrial talc, and rare-earth concentrates.
Based on prior communications with your office, we understand that the Division's primary areas of inquiry during the Proffer Session will include, but are not necessarily limited to, the following:
(a) Mr. Eriksen's role and responsibilities as Regional Sales Manager for the Western Region of TMC's U.S. Specialty Minerals Division, including the scope of his authority with respect to pricing, customer relationships, and sales strategy within his region;
(b) Mr. Eriksen's attendance at NASMC quarterly conferences during the Relevant Period, including specifically his attendance at approximately four such conferences, among them the conferences held in Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida;
(c) Any interactions Mr. Eriksen had with personnel from Ridgecrest Minerals Inc. ("Ridgecrest"), including but not limited to Carl Edgerton, Vice President of Sales at Ridgecrest, and personnel from Pinnacle Earth Resources Ltd. ("Pinnacle"), including but not limited to Kevin Tsang, former Senior Vice President of Commercial Operations at Pinnacle, at or around these NASMC conferences or at any other time during the Relevant Period;
(d) Mr. Eriksen's knowledge, if any, of pricing communications or coordination involving Gavin Holt, former Vice President of U.S. Specialty Minerals Sales at TMC, or any other TMC personnel, with representatives of Ridgecrest, Pinnacle, or any other competitor in the specialty-minerals sector;
(e) TMC's internal pricing processes and methodologies, including the role of the Western Region sales team in setting, approving, or implementing pricing for high-purity feldspar, industrial talc, and rare-earth concentrates, as well as the chain of authority and approval for pricing decisions within TMC's U.S. Specialty Minerals Division.
We understand and acknowledge that the Proffer Session is not strictly limited to the foregoing topics and that the Division may explore additional areas of inquiry as it deems appropriate in the course of the session. However, the Division has indicated that the above matters constitute the primary areas of focus for Mr. Eriksen's proffer.
IV. Queen-for-a-Day Protections — Use Restrictions
The following use restrictions shall govern statements made by Mr. Eriksen during the Proffer Session:
A. No Direct Use Against Mr. Eriksen. Statements made by Mr. Eriksen during the Proffer Session shall not be used directly against him in any criminal prosecution brought by the United States, except as provided in Section VI below (relating to false statements and breach). This protection extends to both the case-in-chief and the sentencing phase of any such criminal prosecution.
B. No Direct Use Against Torchlight Mining Corp. Statements made by Mr. Eriksen during the Proffer Session shall not be used directly against Torchlight Mining Corp. in any criminal prosecution brought by the United States, consistent with the terms of TMC's ongoing cooperation with the Antitrust Division. This provision reflects the understanding that Mr. Eriksen is appearing at the Proffer Session in furtherance of TMC's cooperation obligations and that the use of his statements against TMC would be inconsistent with the cooperative framework under which the proffer is being made.
C. Derivative Use. Notwithstanding the foregoing restrictions, the government retains the right to pursue any and all investigative leads derived from the Proffer Session. Any evidence obtained independently of the Proffer Session, or from sources other than Mr. Eriksen's proffer statements, may be used without restriction, even if such evidence was identified or located as a result of leads derived from the Proffer Session. The parties acknowledge that the derivative-use reservation is a standard and essential component of proffer agreements of this type and that it preserves the government's ability to conduct a thorough and effective investigation.
D. Grand Jury Presentation. The government agrees that it will not present Mr. Eriksen's proffer statements directly to the grand jury sitting in Grand Jury No. GJ-22-0194, or to any successor grand jury empaneled in connection with this Investigation. The government may, however, present to the grand jury any evidence independently obtained as a result of leads derived from the Proffer Session, provided that such evidence is presented on its own merits and not as a vehicle for introducing Mr. Eriksen's proffer statements themselves.
E. Civil Proceedings. The parties acknowledge and agree that the use restrictions set forth in this Section IV apply solely to criminal proceedings. These restrictions do not extend to, and shall have no effect upon, any civil litigation, regulatory proceedings, administrative actions, or other non-criminal proceedings, whether brought by the United States or by any other party. Nothing in this Agreement shall be construed as limiting the government's ability to use or disclose information obtained during the Proffer Session in connection with any civil or administrative matter.
V. Preservation of Government's Rights
The parties acknowledge and agree that the government's rights are preserved in the following respects:
(a) The government reserves all rights to investigate and prosecute any person or entity, including Mr. Eriksen and TMC, based on evidence obtained independent of the Proffer Session. Nothing in this Agreement shall be construed as conferring immunity from prosecution upon Mr. Eriksen or TMC, nor as limiting the government's discretion to bring charges against either or both of them based on independently obtained evidence.
(b) The government may use information obtained during the Proffer Session to cross-examine Mr. Eriksen if he testifies at any subsequent proceeding — including at trial, before a grand jury, in a deposition, or at a sentencing hearing — in a manner inconsistent with statements he made during the Proffer Session. In such event, the government may use the proffer statements for impeachment purposes, including to challenge Mr. Eriksen's credibility and to demonstrate prior inconsistent statements.
(c) The government retains its right to use any and all documents or tangible evidence produced by TMC pursuant to Grand Jury Subpoena Nos. GJ-22-0194-SD-003 and GJ-22-0194-SD-007, irrespective of this Agreement. The protections afforded by this Agreement extend only to statements made by Mr. Eriksen during the Proffer Session itself and do not extend to documents, records, or other tangible materials previously produced by TMC or by any other person or entity in connection with the Investigation.
(d) Nothing in this Agreement limits the government's ability to seek testimony from Mr. Eriksen before the grand jury, whether by subpoena or otherwise, at a later date, should circumstances warrant. Mr. Eriksen's voluntary appearance at the Proffer Session does not create any expectation or commitment on the part of the government regarding future compulsory process.
VI. Exceptions — False Statements and Breach
The protections set forth in Section IV of this Agreement are expressly conditioned upon Mr. Eriksen's truthfulness, completeness, and good faith during the Proffer Session. The following exceptions apply:
(a) False, Misleading, or Materially Incomplete Statements. The protections set forth in Section IV shall not apply if Mr. Eriksen knowingly makes any false, misleading, or materially incomplete statement during the Proffer Session. In such event, the government may use any and all statements made by Mr. Eriksen during the Proffer Session for any purpose whatsoever, including but not limited to use in the government's case-in-chief, for impeachment, for sentencing purposes, or in connection with a prosecution under 18 U.S.C. § 1001 (false statements to federal investigators or prosecutors) or any other applicable criminal statute.
(b) Acknowledgment Under 18 U.S.C. § 1001. Mr. Eriksen has been advised, and hereby acknowledges, that making false, fictitious, or fraudulent statements or representations to federal investigators or prosecutors in connection with a matter within the jurisdiction of the executive branch of the United States government is a federal crime under 18 U.S.C. § 1001, punishable by imprisonment of up to five years, a fine, or both. Mr. Eriksen understands that this obligation of truthfulness applies to all statements made during the Proffer Session, whether in response to direct questions from government personnel or in the course of narrative responses.
(c) Breach of TMC's Cooperation Obligations. If TMC materially breaches its cooperation obligations to the Antitrust Division — including but not limited to obligations related to the production of documents, the making available of witnesses, or the disclosure of relevant information — the government reserves the right to use proffer statements made by Mr. Eriksen to the fullest extent permitted by applicable law. TMC and counsel acknowledge that the cooperative framework under which this proffer is being conducted is integral to the protections afforded herein, and that a material breach of that framework may affect the applicability of those protections.
VII. Presence of Counsel
Mr. Eriksen will be accompanied at the Proffer Session by counsel from Calderwood & Harkness LLP. The following terms govern counsel's participation:
(a) Counsel from Calderwood & Harkness LLP, specifically Elaine Forsythe and/or Aaron Liu, may be present throughout the entirety of the Proffer Session and may observe all questioning of Mr. Eriksen by government personnel.
(b) Counsel may consult with Mr. Eriksen at any time during the Proffer Session, including by requesting brief recesses for the purpose of private consultation outside the presence of government personnel. The parties agree that such requests will be accommodated in good faith and that reasonable breaks will not be unreasonably withheld or delayed.
(c) Disclosure Regarding Scope of Representation. Calderwood & Harkness LLP represents Torchlight Mining Corp. in connection with the Investigation. For purposes of this Proffer Session, Calderwood & Harkness is providing representation to Mr. Eriksen in his capacity as a current employee of TMC. This representation is being provided as part of Calderwood & Harkness's engagement by TMC and does not create a separate, individual attorney-client relationship between Calderwood & Harkness LLP and Mr. Eriksen independent of the TMC engagement. Mr. Eriksen has been fully advised of the nature and scope of this arrangement, including the fact that Calderwood & Harkness's primary obligation of loyalty runs to TMC as the firm's client, and he has consented to proceeding on this basis.
(d) Potential Conflict of Interest. If at any time during the Proffer Session it becomes apparent that a conflict of interest exists or may exist between TMC and Mr. Eriksen — whether arising from the substance of Mr. Eriksen's statements, from questions posed by government personnel, or from any other circumstance — Calderwood & Harkness reserves the right to immediately pause the Proffer Session in order to address the conflict. In such event, Calderwood & Harkness may advise Mr. Eriksen of his right to retain independent personal counsel at his own expense, and the Proffer Session may be adjourned and rescheduled to allow for such retention if necessary. The parties agree that any such pause or adjournment will not be deemed a failure of cooperation on the part of TMC or Mr. Eriksen.
VIII. Logistics
The parties propose the following logistical arrangements for the Proffer Session:
Date: Saturday, April 22, 2023.
Time: We propose a start time of 10:00 a.m. Pacific Time and request that the Division confirm whether this time is acceptable or propose an alternative.
Location: U.S. Department of Justice, Antitrust Division, San Francisco Field Office, 450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102.
Anticipated Duration: We anticipate that the Proffer Session will be a half-day session, lasting approximately three to four hours, including any breaks. We understand that additional time may be scheduled if the Division determines that further questioning is necessary, and we will work cooperatively with the Division to accommodate any such need, whether on the same day or at a subsequently scheduled session.
Government Attendees: We respectfully request that the Division confirm, in advance of the Proffer Session, the identity of all DOJ attorneys, FBI Special Agents, and any other federal agency personnel who will be present during the session. This information will assist us in preparing Mr. Eriksen for the session and in ensuring that all attendees are covered by the terms of this Agreement.
Recording and Memorialization: We request confirmation as to whether the government intends to record the Proffer Session by audio, video, or any other means, and/or whether an FBI Special Agent or other government representative will prepare a written summary or memorandum of the session (e.g., an FBI Form FD-302 or similar report of interview). In the event that the government prepares any such written summary or memorandum, we respectfully request that counsel for TMC be provided with a copy of the document for review, consistent with the practice followed in connection with the proffer session of Sandra Chu on March 10, 2023.
Documents: We respectfully request that the Division identify, in advance of the Proffer Session, any specific documents that it intends to show to Mr. Eriksen during the session. Advance identification of such documents will allow counsel to review them with Mr. Eriksen prior to the session, which will facilitate more efficient and productive questioning. We note that TMC has produced to the Division approximately 555,000 documents in connection with this Investigation — approximately 487,000 documents in response to Grand Jury Subpoena No. GJ-22-0194-SD-003 and approximately 68,000 additional documents in response to Grand Jury Subpoena No. GJ-22-0194-SD-007. Given the volume of materials produced, advance identification of the specific documents the Division intends to use will materially assist in the preparation process and, ultimately, in Mr. Eriksen's ability to provide responsive and complete answers.
IX. No Waiver of Privileges
The Proffer Session and the terms set forth in this Agreement do not constitute, and shall not be construed as, a waiver of any applicable privilege, protection, or immunity, including but not limited to the following:
(a) The attorney-client privilege, as to any communications between Calderwood & Harkness LLP and TMC, between Calderwood & Harkness LLP and Mr. Eriksen, and any internal TMC legal communications involving in-house counsel or other legal advisors;
(b) The work-product doctrine, as to any materials prepared by Calderwood & Harkness LLP, TMC's in-house legal department, or any other counsel or consultant retained in connection with this Investigation in anticipation of litigation or for purposes of providing legal advice;
(c) Any joint-defense privilege or common-interest privilege that may exist by virtue of any joint-defense or common-interest agreement to which TMC or Calderwood & Harkness LLP is a party, whether existing as of the date of this letter or entered into hereafter.
TMC expressly reserves all privilege claims with respect to the foregoing categories of communications and materials. The voluntary nature of Mr. Eriksen's appearance at the Proffer Session, and his provision of information during the session, shall not be deemed a waiver of any Fifth Amendment rights that Mr. Eriksen may otherwise be entitled to assert in any context, whether in this Investigation or in any other proceeding.
X. Relation to TMC's Cooperation Obligations
Mr. Eriksen's voluntary Proffer Session is being made in furtherance of TMC's cooperation with the Antitrust Division, as previously communicated in Calderwood & Harkness's letters to the Division dated June 8, 2022, and in TMC's cooperation proffer submitted on February 15, 2023. TMC has undertaken, as part of its cooperation, to make current and former employees available for voluntary proffer sessions and interviews with the Division, and Mr. Eriksen's appearance is consistent with that commitment.
TMC anticipates and respectfully submits that the Division will consider Mr. Eriksen's forthcoming proffer, together with TMC's broader cooperation efforts — including the prior proffer session of Sandra Chu and the extensive document productions described above — in evaluating TMC's eligibility for cooperation credit in any disposition of this matter, including in any plea agreement, deferred prosecution agreement, non-prosecution agreement, or other resolution that may be reached between TMC and the Division. TMC recognizes that the determination of cooperation credit is within the sole discretion of the Division, but submits that the voluntary and good-faith nature of TMC's cooperation warrants appropriate consideration.
As noted above, this Proffer Session follows the successful completion of the voluntary proffer session of Sandra Chu, Director of Pricing Analytics, U.S. Specialty Minerals Division, TMC, which took place on March 10, 2023, under substantially similar terms and conditions as those set forth herein. TMC intends to continue making witnesses available to the Division as appropriate and as agreed upon by the parties in furtherance of TMC's cooperation.
XI. Confirmation and Signature
We respectfully request that the Division confirm its agreement to the foregoing terms and conditions by countersigning a copy of this letter in the space provided below and returning the executed copy to Calderwood & Harkness LLP prior to the scheduled Proffer Session date of April 22, 2023. An executed copy may be returned via email to the undersigned at eforsythe@calderwoodharkness.com, with a hard copy to follow by mail.
If the Division proposes any modifications to the terms set forth above, we request that those modifications be communicated to us promptly so that the parties may resolve any differences well in advance of the scheduled session date. We are available to discuss any proposed revisions by telephone or in person at the Division's convenience.
We appreciate the Division's professionalism and cooperation in this matter, and we look forward to a productive Proffer Session.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Elaine Forsythe Partner, Antitrust & Competition Practice Group
AGREED AND ACCEPTED
The United States Department of Justice, Antitrust Division, San Francisco Field Office, hereby agrees to the terms and conditions set forth in the foregoing letter dated April 15, 2023, governing the proffer session of Thomas Eriksen scheduled for April 22, 2023.
U.S. DEPARTMENT OF JUSTICE ANTITRUST DIVISION SAN FRANCISCO FIELD OFFICE
By: ________
Denise Kowalski Trial Attorney
Date: ________
cc: Marcus Reeves, Senior Trial Attorney, Antitrust Division, San Francisco Field Office, U.S. Department of Justice, 450 Golden Gate Avenue, Room 10-0101, San Francisco, CA 94102
cc: Priya Anand, General Counsel, Torchlight Mining Corp. (via separate cover — privileged and confidential)
cc: Aaron Liu, Lead Associate, Calderwood & Harkness LLP
Calderwood & Harkness LLP