PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 555 California Street, 40th Floor San Francisco, California 94104 Telephone: (415) 773-6000 Facsimile: (415) 773-6001
MEMORANDUM
Matter No. 1039-00001 February 28, 2022
TO: Elaine Forsythe, Responsible Partner, Antitrust & Competition Practice Group
FROM: Aaron Liu, Lead Associate, Antitrust & Competition Monica Reyes, Working Associate, Antitrust & Competition
RE: Analysis of Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003, In re Grand Jury Investigation No. GJ-22-0194, U.S. District Court for the Northern District of California, San Francisco Division
This memorandum constitutes attorney work product prepared in anticipation of litigation. It is privileged and confidential and should not be disclosed to any third party without prior authorization of the responsible partner.
Right-click to update Table of Contents
I. Executive Summary
Calderwood & Harkness LLP ("C&H") received Grand Jury Subpoena Duces Tecum No. GJ-22-0194-SD-003 (the "Subpoena") on behalf of Torchlight Mining Corp. ("TMC") on February 14, 2022. The Subpoena was issued by the Antitrust Division of the United States Department of Justice ("DOJ"), San Francisco Field Office, under Grand Jury No. GJ-22-0194, sitting in the United States District Court for the Northern District of California, San Francisco Division. The Subpoena was served on Torchlight Mining (U.S.) Inc. ("TMC US"), the wholly owned U.S. subsidiary of Torchlight Mining Corp. (CBCA Corporation No. 7841526-1), at its principal office located at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117.
TMC formally engaged Calderwood & Harkness to represent its interests in this matter on February 18, 2022. On February 22, 2022, C&H sent a letter to Trial Attorney Denise Kowalski at the DOJ Antitrust Division, San Francisco Field Office (450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102), acknowledging receipt of the Subpoena and requesting a 60-day extension of the initial return date to allow sufficient time for the identification, collection, review, and production of responsive materials. As of the date of this memorandum, we have not yet received a formal response to the extension request, although initial communications with the DOJ suggest that the Antitrust Division is amenable to a rolling production schedule.
The Subpoena seeks documents relating to the pricing, sale, and distribution of three product categories: (i) high-purity feldspar, (ii) industrial talc, and (iii) rare-earth concentrates, sold in the United States and Canada, spanning the period from approximately January 1, 2012 through the present (February 2022). The nine categories of document requests contained in the Subpoena are broad in scope and encompass pricing records, competitor communications, customer and sales data, trade association materials, market intelligence documents, corporate compliance records, organizational and personnel files, financial and accounting records, and bid/RFP documents.
This memorandum provides a detailed analysis of each document-request category, identifies potentially responsive data sources and custodians within the TMC organization, estimates the volume of responsive materials, and recommends a collection and review strategy designed to ensure compliance with the Subpoena while protecting TMC's privilege and other legitimate interests.
Our preliminary estimate of the total responsive document universe is approximately 400,000 to 600,000 documents across all custodians and data sources (after de-duplication and processing). This estimate corresponds to an approximate page count of 2 to 4 million pages. Based on this volume estimate and the staffing and technology resources available, we project an overall review timeline of approximately 4 to 6 months for rolling production, with the first substantive production targeted for early April 2022.
The sections that follow provide the analytical detail underlying these estimates and recommendations.
II. Background
A. The Investigation
The Antitrust Division of the United States Department of Justice formally opened Grand Jury Investigation No. GJ-22-0194 on or about February 10, 2022. The investigation is being conducted through the DOJ's San Francisco Field Office and concerns suspected violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, in the North American specialty-minerals sector. Specifically, the DOJ is investigating allegations of price-fixing, market allocation, and bid-rigging involving the sale and distribution of three categories of specialty mineral products: high-purity feldspar, industrial talc, and rare-earth concentrates.
The lead DOJ prosecutors assigned to the investigation are Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves, both of the San Francisco Field Office. The investigation is being supervised by Deputy Assistant Attorney General Julia Stafford-Hayes, who oversees criminal enforcement matters within the Antitrust Division's San Francisco operations.
Based on information available to C&H as of the date of this memorandum, the investigation involves the following additional known subjects and/or targets:
Ridgecrest Minerals Inc. — A Delaware corporation headquartered at 1700 Lincoln Street, Suite 4200, Denver, Colorado 80203. Ridgecrest received a target letter from the DOJ on or about January 12, 2022, indicating that the Antitrust Division has substantial evidence linking the company to the alleged conspiracy. Ridgecrest is represented by Davenport, Kline & Archer LLP, with lead partner Helen Marchetti handling the defense.
Pinnacle Earth Resources Ltd. — An Ontario corporation with U.S. operations headquartered at 222 South Main Street, Suite 1500, Salt Lake City, Utah 84101. Pinnacle's status as a subject or target has not been confirmed to C&H, but its receipt of a subpoena similar in scope to the one served on TMC US is indicative of its involvement. Pinnacle is represented by Ashford Whitmore LLP, with lead partner George Nakamura.
A critical component of the investigation involves a cooperating witness entity:
Cascade Chemical Supply Co. — A Washington state corporation with its principal place of business at 901 West Riverside Avenue, Suite 300, Spokane, Washington 99201. Cascade entered into a cooperation agreement with the DOJ Antitrust Division on or about September 15, 2021. Under this agreement, Cascade is providing testimony, documents, and other evidence to the grand jury in exchange for favorable treatment in any subsequent criminal proceedings. Cascade is represented by Whitfield, Strauss & Tully LLP, with partner Rebecca Ostrander serving as lead counsel.
The existence of a cooperating witness entity is significant because it indicates that the DOJ likely already possesses substantial documentary and testimonial evidence regarding the alleged conspiracy. Cascade's cooperation agreement predates the formal opening of the grand jury investigation by approximately five months, which suggests that the DOJ spent considerable time debriefing Cascade personnel and reviewing Cascade documents before convening the grand jury and issuing subpoenas to other participants.
Based on information obtained during our initial review of the Subpoena and preliminary discussions with TMC's General Counsel, Priya Anand, the alleged conspiracy period is approximately January 2017 through August 2021 — a span of approximately four years and eight months. The Subpoena's temporal scope, however, extends well beyond this period, beginning on January 1, 2012, in order to capture pre-conspiracy background and context, as well as any post-conspiracy continuation of effects through the present.
B. TMC Overview (Relevant to Subpoena Scope)
An understanding of TMC's corporate structure and business operations is essential to analyzing the scope of the Subpoena and identifying responsive data sources and custodians.
Corporate Structure and Registrations. Torchlight Mining Corp. is a publicly traded corporation organized under the Canada Business Corporations Act ("CBCA"), holding CBCA Corporation No. 7841526-1 and Canadian Business No. 741 829 456 RC0001. TMC's common shares are listed on the Toronto Stock Exchange under the ticker symbol "TRCL" and on the New York Stock Exchange under the ticker symbol "TMC." TMC's registered office is located at 200 Bay Street, Suite 3400, Toronto, Ontario M5J 2J2, Canada.
TMC's U.S. operations are conducted primarily through its wholly owned subsidiary, Torchlight Mining (U.S.) Inc. ("TMC US"), a Nevada corporation bearing Nevada Entity No. NV20160438721 and Federal Employer Identification Number 83-2947106. TMC US's principal office is located at 8750 West Sahara Avenue, Suite 210, Reno, Nevada 89117. TMC US is the entity that was served with the Subpoena and is the direct subject of the grand jury's investigation within the United States.
Financial Overview. For the fiscal year ended December 31, 2021, TMC reported consolidated revenue of approximately CAD 4.27 billion (approximately USD 3.38 billion at prevailing exchange rates). Consolidated EBITDA for the same period was approximately CAD 812 million. Of particular relevance to this investigation, the U.S. Specialty Minerals Division — the division at the center of the DOJ's inquiry — generated fiscal year 2021 revenue of approximately USD 687 million, representing approximately 20.3% of TMC's consolidated revenue. The U.S. Specialty Minerals Division is thus a material segment of TMC's overall business, and the financial exposure associated with this investigation is correspondingly significant.
Operational Footprint. TMC operates 14 mines across four countries — Canada, the United States, Brazil, and Australia — as well as six downstream chemical-processing facilities. The U.S. Specialty Minerals Division sources raw materials from TMC's domestic and Canadian mining operations and processes them at facilities in Nevada, Utah, and North Carolina before selling finished specialty mineral products to industrial customers throughout the United States and Canada. The three product categories identified in the Subpoena — high-purity feldspar, industrial talc, and rare-earth concentrates — are the principal product lines of the U.S. Specialty Minerals Division.
Key Individuals. The following individuals are of particular relevance to the Subpoena and the underlying investigation:
Gavin Holt — Former Vice President of U.S. Specialty Minerals Sales. Mr. Holt served in this role from 2016 through 2021 and resigned effective September 30, 2021. Mr. Holt is the most directly implicated individual based on the information currently available to C&H. As discussed in greater detail below, Mr. Holt is alleged to have communicated directly with counterparts at Ridgecrest Minerals and Pinnacle Earth Resources through an encrypted messaging platform (VaultChat) during the alleged conspiracy period.
Sandra Chu — Director, Pricing Analytics, U.S. Specialty Minerals Division. Ms. Chu is responsible for maintaining and updating the Division's pricing databases, price lists, and customer-specific pricing records. She reported to Mr. Holt during the relevant period and received pricing-adjustment instructions from him.
Thomas Eriksen — Regional Sales Manager, Western Region, U.S. Specialty Minerals Division. Mr. Eriksen manages customer relationships and bid submissions for the Division's western U.S. accounts. He attended at least four North American Specialty Minerals Council ("NASMC") conferences during the alleged conspiracy period and is a significant custodian for purposes of trade association and bid-related document categories.
Priya Anand — General Counsel, Torchlight Mining Corp. Ms. Anand oversees TMC's legal function and is the primary custodian for compliance policy documents, internal communications regarding the investigation, and litigation-hold implementation. Ms. Anand oversaw initial document preservation steps prior to C&H's formal engagement.
Richard Fong — Chief Financial Officer, Torchlight Mining Corp. Mr. Fong is responsible for TMC's financial reporting and is the primary custodian for divisional financial records, management reports, and audit committee materials relevant to the Subpoena's financial-records category.
III. Subpoena Specifications — Document Request Categories
The Subpoena contains nine document-request categories. This section analyzes each category, identifies the principal data sources and custodians, and provides a preliminary estimate of responsive document volume. The full text of the Subpoena is attached as Appendix A to this memorandum (not reproduced herein).
A. Category 1: Pricing Documents
Subpoena Specification. Category 1 requests all documents relating to the pricing of high-purity feldspar, industrial talc, and rare-earth concentrates sold to customers in the United States and Canada, from January 1, 2012 to the present. The category includes, without limitation, the following subcategories of documents:
(a) Published price lists and pricing schedules;
(b) Customer-specific pricing terms, including negotiated discounts, rebates, and volume-based pricing arrangements;
(c) discount matrices and pricing tiers;
(d) Price-change announcements to customers;
(e) Internal pricing approval memoranda and pricing authorization chains;
(f) Pricing strategy documents, including presentations to senior management or the board of directors;
(g) Pricing authority delegation policies establishing which individuals within TMC have authority to set, modify, or approve pricing for each product category; and
(h) Any other documents reflecting or relating to the establishment, modification, or implementation of pricing for the specified products.
Analysis. This is the broadest and most critical document-request category in the Subpoena. Pricing documents are at the core of any price-fixing investigation, as they provide the evidentiary foundation for demonstrating whether prices were set through independent competitive decisions or through coordinated action with competitors.
The U.S. Specialty Minerals Division maintains comprehensive pricing databases that track published prices, customer-specific pricing, and historical pricing changes. Price lists are updated quarterly, and customer-specific pricing records are maintained in the Division's customer relationship management ("CRM") system and in standalone spreadsheets maintained by the pricing analytics team. The Division's pricing authority delegation policy specifies that pricing decisions for transactions above certain thresholds required the approval of the Vice President of Sales (during the relevant period, Gavin Holt), while transactions below those thresholds could be approved at the Regional Sales Manager level.
Sandra Chu (Director, Pricing Analytics) is the primary custodian for pricing analytics files, including the master pricing databases, quarterly price lists, customer-specific pricing summaries, and pricing strategy presentations. Ms. Chu's files are expected to contain the bulk of the responsive documents in this category. Gavin Holt (former VP Sales) held pricing authority for the Division and would have generated or approved the majority of pricing decisions from 2016 through his departure in September 2021. His email and shared-drive files are therefore critical sources for pricing approval memoranda, pricing strategy discussions, and communications regarding pricing changes. Thomas Eriksen's files are also likely to contain customer-specific pricing documents for Western Region accounts.
The temporal scope of this category (January 1, 2012 to the present) is particularly significant because it captures the full evolution of TMC's pricing practices, allowing the DOJ to compare pricing patterns before, during, and after the alleged conspiracy period.
Estimated Volume: 80,000 to 120,000 documents, including pricing databases, spreadsheets, email communications, internal memoranda, presentations, and price-list versions.
B. Category 2: Communications with Competitors
Subpoena Specification. Category 2 requests all documents constituting, reflecting, or relating to any communication between any TMC officer, director, employee, agent, or representative and any officer, director, employee, agent, or representative of Ridgecrest Minerals Inc., Pinnacle Earth Resources Ltd., or any other competitor in the specialty-minerals sector, from January 1, 2012 to the present. The category expressly encompasses communications of any kind, including written, electronic, and telephonic communications, as well as in-person communications memorialized in meeting notes, calendar entries, travel records, or any other form.
Analysis. This category directly targets the communications that form the alleged conspiracy. As such, it is the most sensitive and forensically complex category in the Subpoena.
Based on C&H's preliminary review and discussions with TMC's General Counsel, it appears that an encrypted messaging application known as VaultChat was allegedly used by Gavin Holt to communicate with Carl Edgerton (Vice President of Sales at Ridgecrest Minerals Inc.) and Kevin Tsang (former Senior Vice President of Commercial Operations at Pinnacle Earth Resources Ltd.). VaultChat is a third-party encrypted messaging platform that provides end-to-end encryption and, in certain configurations, allows users to set messages to auto-delete after a specified period. Preliminary forensic analysis conducted by TMC's internal IT department prior to C&H's engagement identified at least 37 documented VaultChat exchanges between Holt and Edgerton and/or Tsang occurring between approximately March 14, 2017 and July 2021. The content of these exchanges has not yet been fully reviewed by C&H, but the date range aligns with the alleged conspiracy period.
In addition to VaultChat data, this category also encompasses email communications, telephone records (including call logs and any recorded calls), in-person meeting notes, calendar entries reflecting meetings or calls with competitor personnel, and travel records reflecting trips to locations where meetings with competitors may have occurred. Phone records maintained by TMC's telecommunications provider will need to be preserved and collected to identify any telephone communications between TMC personnel and personnel at Ridgecrest, Pinnacle, or other competitor firms.
Estimated Volume: 15,000 to 25,000 documents, including email communications, VaultChat messaging archives, telephone logs, meeting notes, calendar entries, and related records.
Special Considerations. VaultChat data presents significant forensic challenges. The encrypted nature of the application means that message content may not be recoverable from standard corporate backup systems. Recovery may require forensic extraction from Holt's former corporate devices (if retained by TMC upon his separation) and/or from TMC's enterprise mobile device management ("MDM") system, which may have captured device snapshots or backup images. Redstone Digital Forensics Inc. (retained effective March 15, 2022) will conduct the forensic assessment and recovery effort. The inability to recover VaultChat data could raise spoliation concerns with the DOJ, particularly given that the messages are at the heart of the alleged conspiracy. This issue is discussed further in Section IX.A below.
C. Category 3: Customer and Sales Records
Subpoena Specification. Category 3 requests documents relating to TMC's customers for high-purity feldspar, industrial talc, and rare-earth concentrates in the United States, including but not limited to customer lists, customer contracts, purchase orders, invoices, sales volume data, revenue by customer, customer allocation records, and bid or proposal documents.
Analysis. This category is designed to provide the DOJ with a comprehensive picture of TMC's customer base, sales patterns, and the economic impact of any alleged anticompetitive conduct. Customer allocation records are of particular significance, as the investigation includes allegations of market allocation — that is, agreements among competitors to divide customers or territories among themselves.
The primary data sources for this category are TMC's CRM system, the Division's ERP system (which maintains transaction-level data for invoices, purchase orders, and revenue), and the Division's contract management database, which stores executed customer contracts, amendments, and pricing agreements. Thomas Eriksen (Regional Sales Manager, Western Region) and the broader sales team within the U.S. Specialty Minerals Division are the principal custodians for customer-facing documents such as contracts, bid files, and correspondence with customers. Additional responsive materials may reside in shared network drives maintained by the Division's sales administration function.
Given the ten-year temporal scope of this category and the volume of transactional data generated by a division with USD 687 million in annual revenue, this category is expected to produce the largest volume of responsive documents among all nine categories.
Estimated Volume: 100,000 to 150,000 documents, including customer contracts, purchase orders, invoices, CRM records, bid files, and customer correspondence.
D. Category 4: Trade Association Documents
Subpoena Specification. Category 4 requests all documents relating to TMC's participation in the North American Specialty Minerals Council ("NASMC") or any other industry or trade association, including but not limited to meeting agendas, minutes, attendee lists, presentations, position papers, conference registrations, travel records, and expense reports, from January 1, 2012 to the present.
NASMC is a trade association headquartered at 2300 Wilson Boulevard, Suite 400, Arlington, Virginia 22201. NASMC hosts quarterly conferences that bring together representatives from across the specialty-minerals industry, including representatives from TMC, Ridgecrest, Pinnacle, and Cascade.
Analysis. Trade association events are a well-known focal point in cartel investigations because they provide opportunities for competitor representatives to meet in person under the cover of legitimate industry activities. The DOJ alleges that anticompetitive side meetings occurred at NASMC quarterly conferences held in the following locations during the alleged conspiracy period:
• Arlington, Virginia (multiple conferences, 2017–2021)
• Scottsdale, Arizona (at least one conference, believed to be 2018 or 2019)
• Orlando, Florida (at least one conference, believed to be 2019 or 2020)
Thomas Eriksen attended at least four NASMC conferences during the alleged conspiracy period, and Gavin Holt also attended multiple NASMC events. TMC's marketing department and executive assistants to Holt and division leadership may hold relevant travel and expense records associated with NASMC attendance. NASMC itself may have circulated agenda materials, attendee lists, and presentation decks to TMC attendees, and copies of these materials may reside in email archives or shared drives.
The collection effort for this category will need to encompass not only formal NASMC materials but also informal records such as calendar entries reflecting side meetings, personal notes taken during or after NASMC events, and expense reports that may document meals, entertainment, or other activities involving competitor personnel.
Estimated Volume: 5,000 to 10,000 documents, including meeting agendas, attendee lists, travel authorizations, expense reports, calendar entries, and presentations.
E. Category 5: Market and Competitive intelligence
Subpoena Specification. Category 5 requests documents relating to TMC's analysis of market conditions, competitor activities, market share, supply and demand dynamics, and competitive intelligence in the specialty-minerals sector, from January 1, 2012 to the present. This includes internal market-analysis reports, industry publications received or maintained by TMC, reports from third-party consultants, board presentations regarding competitive positioning, and any other documents reflecting TMC's analysis of or knowledge about the competitive landscape.
Analysis. Market and competitive intelligence documents are relevant to the investigation because they may reveal the extent to which TMC had access to non-public competitive information — information that, if obtained through collusive channels, would corroborate the existence of an agreement among competitors.
The U.S. Specialty Minerals Division's marketing and strategy teams generated regular market-analysis reports, typically on a monthly or quarterly basis, summarizing market trends, competitor pricing and capacity developments, and customer demand patterns. Senior management, including Holt, Eriksen, and Chu, were recipients and often contributors to these reports. Board-level presentations on the Division's competitive positioning were typically prepared by division leadership (the VP of Sales and the Director of Pricing Analytics) on a semi-annual basis.
Additionally, TMC may have retained third-party consultant reports analyzing the specialty-minerals market. To the extent such reports were commissioned by TMC's legal department for purposes of legal advice (as opposed to business strategy), they may be subject to privilege claims, and this issue will be assessed during the privilege review process.
Estimated Volume: 15,000 to 25,000 documents, including internal market reports, consultant studies, board and management presentations, industry publications, and related correspondence.
F. Category 6: Corporate Policies and Compliance
Subpoena Specification. Category 6 requests all documents relating to TMC's antitrust compliance policies, competition-law training materials, compliance certifications, and any internal audits or reviews of compliance with antitrust or competition laws, from January 1, 2012 to the present.
Analysis. Although this category is expected to produce the smallest volume of responsive documents, it is of outsized significance to the investigation. The DOJ routinely evaluates the existence and effectiveness of a company's antitrust compliance program in determining the appropriate charges, plea terms, and penalties. A robust compliance program that was in place and actively enforced can serve as a mitigating factor, while a deficient or dormant compliance program can aggravate the DOJ's assessment of culpability.
TMC adopted its initial antitrust compliance policy in approximately 2014. The policy sets forth general principles regarding prohibited conduct under U.S. and Canadian competition laws and includes provisions requiring employees to report any contacts with competitors and to avoid discussions of pricing, customers, or market allocation with competitor personnel. However, our preliminary review indicates significant deficiencies in the implementation and enforcement of this policy:
• The last annual antitrust training session was conducted in approximately 2018. No annual antitrust training has been conducted in the intervening years (2019, 2020, 2021, or 2022 to date).
• There is no evidence that TMC implemented any monitoring or oversight mechanism for trade-association interactions — that is, no protocols requiring advance approval for NASMC attendance, no debriefing requirements for attendees, and no restrictions on unstructured interactions with competitor personnel at industry events.
• There is no evidence that TMC conducted any internal audit of compliance with antitrust or competition laws during the relevant period.
• There is no evidence that TMC required periodic compliance certifications from employees in the U.S. Specialty Minerals Division or other business units with significant competitor contact.
These deficiencies will likely be a focal point of the DOJ's assessment of TMC's culpability and will inform the DOJ's charging decisions and any plea negotiations. Priya Anand (General Counsel) is the primary custodian for this category, as the legal department is responsible for maintaining compliance policies and training records.
Estimated Volume: 500 to 1,500 documents, including compliance policies, training materials, sign-in sheets, any compliance certifications, and internal audit reports (if any exist).
G. Category 7: Organizational Documents and Personnel Records
Subpoena Specification. Category 7 requests organizational charts, reporting lines, and position descriptions for the U.S. Specialty Minerals Division from January 1, 2012 to the present, as well as employment records — including hiring, separation, and disciplinary records — for specifically named individuals, including Gavin Holt.
Analysis. Organizational documents are essential for the DOJ to understand TMC's management structure, reporting relationships, and the authority and responsibilities of individuals involved in pricing decisions, customer relationships, and trade-association participation. The DOJ's specific interest in Gavin Holt's personnel records is consistent with the expectation that Holt is a primary target of the investigation.
TMC's Human Resources department will need to be engaged to collect organizational charts for the U.S. Specialty Minerals Division covering the full ten-year period. These charts are typically updated annually or in connection with significant organizational changes. Holt's complete personnel file — including his original offer letter, performance evaluations, compensation records, any disciplinary actions, his resignation letter (effective September 30, 2021), any separation or severance agreement, and any exit-interview materials — is responsive to this category. The circumstances of Holt's departure, including whether his resignation was voluntary or prompted by TMC's awareness of the investigation, may be of significant interest to the DOJ.
Estimated Volume: 2,000 to 4,000 documents, including organizational charts, position descriptions, and personnel records for named individuals.
H. Category 8: Financial and Accounting Records
Subpoena Specification. Category 8 requests financial records relating to the U.S. Specialty Minerals Division's revenue, cost of goods sold, and profitability for each of the three product categories (high-purity feldspar, industrial talc, and rare-earth concentrates) from January 1, 2012 to the present.
Analysis. Financial records serve multiple purposes in an antitrust investigation. They allow the DOJ to quantify the volume of affected commerce (which is a key factor in determining criminal fines under the U.S. Sentencing Guidelines), to identify anomalous profitability patterns that may be indicative of supracompetitive pricing, and to assess the economic impact of the alleged conspiracy on customers and the market.
Richard Fong (CFO) and the finance team are the primary custodians for divisional profit-and-loss statements, management reports, and budget documents. TMC's ERP system, which is Hollowell & Co.-based, can generate product-level revenue and cost reports, including historical data going back to the inception of the current ERP implementation. Monthly and quarterly financial reporting packages for the U.S. Specialty Minerals Division are prepared by the finance team and distributed to senior management.
TMC's independent auditor, Calvert & Associates LLP (engagement partner Daniel Moreau), may also possess relevant financial data in its audit workpapers, including segment-level analyses, revenue testing schedules, and management representation letters. However, Calvert's workpapers are not within TMC's possession, custody, or control absent a specific request or subpoena directed to Calvert. We note this for completeness, as the DOJ may separately subpoena Calvert or request that TMC obtain and produce auditor workpapers.
Estimated Volume: 10,000 to 20,000 documents, including divisional financial statements, management reports, ERP data extracts, budget documents, and related correspondence.
I. Category 9: Bid and RFP Documents
Subpoena Specification. Category 9 requests all documents relating to bids, proposals, responses to requests for proposals ("RFPs"), or competitive tenders submitted by TMC for the supply of high-purity feldspar, industrial talc, or rare-earth concentrates to any customer in the United States, from January 1, 2012 to the present.
Analysis. Bid-rigging is alleged as one component of the overall conspiracy. In a bid-rigging scheme, competitors agree in advance on which firm will submit the winning bid for a particular customer's business, with the other firms either abstaining from bidding, submitting deliberately non-competitive "cover" bids, or rotating winning bids among the conspirators over time. Bid and RFP documents are therefore critical to the DOJ's investigation, as they allow prosecutors to compare TMC's bid submissions with those of Ridgecrest, Pinnacle, and other competitors to identify patterns consistent with bid coordination.
The U.S. Specialty Minerals Division maintains bid files in both shared network drives and the CRM system. Bid files typically include the customer's RFP or invitation to bid, TMC's internal cost estimates and margin analysis, the bid/no-bid decision documentation, the final bid submission, and any post-bid correspondence including award or rejection notifications. Gavin Holt, as VP of Sales, would have been the ultimate decision-maker on bid strategy and pricing for major bids during his tenure. Thomas Eriksen would have led bid preparation and submission for Western Region accounts.
The temporal scope of this category (January 1, 2012 to the present) will capture bids submitted both before and during the alleged conspiracy period, enabling the DOJ to compare the competitiveness and outcomes of TMC's bids across these periods.
Estimated Volume: 20,000 to 35,000 documents, including RFP responses, bid summaries, bid/no-bid decision memoranda, internal cost estimates, award and rejection notifications, and related correspondence.
IV. Temporal Scope Analysis
The Subpoena's date range — January 1, 2012 to the present (February 2022) — encompasses a period of approximately ten years. This temporal scope extends approximately five years before the alleged conspiracy period (January 2017 through August 2021) and approximately six months after the alleged conspiracy period concluded.
The pre-conspiracy period (January 2012 through December 2016) is likely sought by the DOJ for several purposes:
(a) To establish baseline pricing patterns for the three product categories, enabling the DOJ to identify inflection points at which pricing behavior deviated from historical norms, potentially coinciding with the commencement of the alleged conspiracy;
(b) To document pre-existing competitive dynamics in the specialty-minerals sector, including historical market shares, customer relationships, and bidding patterns;
(c) To identify the point at which the alleged coordination commenced, including any precursor communications or meetings among competitor representatives that may have laid the groundwork for the alleged conspiracy;
(d) To evaluate TMC's compliance posture during the pre-conspiracy period and assess whether the alleged conduct represented a departure from previously established compliance practices; and
(e) To provide context for organizational changes, including the hiring and promotion of individuals who later became involved in the alleged conspiracy.
The core conspiracy period (January 2017 through August 2021) is the primary focus of the investigation and will generate the highest volume of directly incriminating or exculpatory evidence. Document collection and review efforts should be prioritized for this period.
The post-conspiracy period (August 2021 through February 2022) captures several important developments, including the termination of the alleged conspiracy, Gavin Holt's resignation from TMC effective September 30, 2021, any ongoing effects of the alleged conspiracy on pricing and customer relationships, and TMC's initial response to the investigation.
Recommendation. We recommend prioritizing the collection and review of documents from the core conspiracy period (2017–2021) for initial rolling productions, particularly for the highest-priority document categories (Categories 1 and 2: Pricing Documents and Communications with Competitors). Pre-2017 and post-August 2021 materials should be collected in parallel but reviewed on a secondary basis, with production to follow in subsequent rolling installments.
V. Custodian Identification and Data Sources
A. Proposed Key Custodians (Priority Tier 1)
Based on our analysis of the Subpoena's specifications and the organizational structure of TMC's U.S. Specialty Minerals Division, we have identified five individuals as Priority Tier 1 custodians — that is, individuals whose files are most likely to contain the highest concentration of responsive documents and whose data should be collected and reviewed first.
1. Gavin Holt — Former Vice President, U.S. Specialty Minerals Sales
Mr. Holt is the most directly implicated individual in the alleged conspiracy. He served as VP of U.S. Specialty Minerals Sales from 2016 until his resignation effective September 30, 2021. In that role, he had ultimate authority over pricing decisions, customer relationships, bid strategy, and trade-association participation for the Division. He is alleged to have communicated directly with counterparts at Ridgecrest Minerals (Carl Edgerton) and Pinnacle Earth Resources (Kevin Tsang) through the VaultChat encrypted messaging application. At least 37 documented VaultChat exchanges between Holt and Edgerton and/or Tsang have been identified between March 14, 2017 and July 2021.
Data sources for Holt include his corporate email archive (preserved upon separation in TMC's Strathmore Data Systems/Ashbury Software environment), VaultChat archives (forensic recovery required), shared-drive files, calendar entries, expense and travel records, and any data from corporate-issued devices. Because Holt has departed TMC, data collection will be limited to materials that remain within TMC's corporate systems and any devices that were returned upon his separation. Coordination with TMC IT is required to confirm the status of Holt's archived email, the disposition of his corporate devices (laptop, mobile phone), and the availability of enterprise MDM snapshots that may contain VaultChat data. Personal devices owned by Holt but not issued by TMC may be outside TMC's possession, custody, or control, and this issue is discussed further in Section IX.
2. Sandra Chu — Director, Pricing Analytics, U.S. Specialty Minerals Division
Ms. Chu is responsible for the Division's pricing databases, quarterly price-list updates, customer-specific pricing records, and pricing strategy analyses. She reported to Gavin Holt during the relevant period and received pricing-adjustment instructions from him, making her a critical witness and document custodian for Category 1 (Pricing Documents). Data sources for Chu include her active email mailbox, shared-drive files (including the pricing databases, price lists, and pricing strategy presentations), CRM data, and calendar entries.
3. Thomas Eriksen — Regional Sales Manager, Western Region, U.S. Specialty Minerals Division
Mr. Eriksen manages customer relationships and bid submissions for the Division's western U.S. accounts. He attended at least four NASMC conferences during the alleged conspiracy period, making him a key custodian for Category 4 (Trade Association Documents) as well as Categories 3 (Customer/Sales Records) and 9 (Bids/RFPs). Data sources for Eriksen include his email, bid files, CRM data, calendar entries, and expense and travel records.
4. Priya Anand — General Counsel, Torchlight Mining Corp.
Ms. Anand oversees TMC's legal function and is the primary custodian for compliance policy documents (Category 6), internal communications regarding the investigation, and litigation-hold implementation. Her files will also contain communications with C&H and any prior counsel regarding the investigation. Data sources include her email, shared-drive files, and any physical files maintained in the legal department. Note that a significant portion of Ms. Anand's files may be subject to attorney-client privilege, and early identification and segregation of privileged materials from her custodial set will be essential.
5. Richard Fong — Chief Financial Officer, Torchlight Mining Corp.
Mr. Fong is responsible for TMC's financial reporting and is the primary custodian for divisional financial records (Category 8), management reports, and audit committee materials. Data sources include his email, financial systems (Aldermere Services Inc.), management reporting files, and shared-drive documents.
B. Proposed Additional Custodians (Priority Tier 2)
In addition to the five Priority Tier 1 custodians identified above, we have preliminarily identified approximately 29 additional individuals as Priority Tier 2 custodians. These individuals are expected to hold responsive documents, but their files are less likely to contain the highest-priority materials and will be collected and reviewed after the Tier 1 custodian sets. The Tier 2 custodians include:
• Other U.S. Specialty Minerals Division sales representatives and managers, including regional sales managers for the Eastern, Central, and Southern regions and their direct reports (names to be confirmed through review of organizational charts);
• Division marketing and strategy personnel responsible for competitive intelligence and market-analysis reports (Category 5);
• Executive assistants to Gavin Holt and other division leadership, who managed travel booking, expense submission, calendar management, and correspondence (relevant to Categories 2, 4, and 7);
• Human Resources personnel with access to Gavin Holt's personnel file and division organizational records (Category 7);
• IT administrators with access to VaultChat data, mobile device management records, and email archival systems (relevant to the forensic collection effort for Category 2); and
• Finance department personnel responsible for preparing divisional financial reports and ERP data extracts (Category 8).
The total estimated number of custodians across both tiers is approximately 34 individuals. The final custodian list will be confirmed in the Data Collection Protocol and Custodian List memorandum, which is being prepared by Monica Reyes with a target completion date of March 18, 2022.
C. Data Sources
The following data sources have been identified as potentially containing responsive documents. Each source is described below with relevant details regarding its content, custodial ownership, and collection considerations.
1. Email Systems. TMC and TMC US operate on the Strathmore Data Systems / Ashbury Software platform for corporate email. Collection will include active mailboxes for current employees and archived mailboxes for departed employees, including Gavin Holt. TMC IT has confirmed that email archives for separated employees are retained for a minimum of seven years under TMC's standard data-retention policy, meaning that Holt's email data from his entire tenure (2016–2021) should be available. The collection will encompass emails, attachments, calendar entries, and contacts stored within the Exchange environment.
2. VaultChat Archives. VaultChat is an encrypted messaging application that was used by Gavin Holt and potentially other TMC personnel to communicate with competitor representatives. Forensic extraction is required to recover VaultChat data from corporate systems. Redstone Digital Forensics Inc. (retained effective March 15, 2022) will assess the availability of VaultChat data on corporate servers, enterprise MDM snapshots, corporate backup systems, and any corporate devices returned by Holt upon his separation. VaultChat's end-to-end encryption means that local device data or cloud backups associated with specific user accounts may be the only viable recovery vectors. The first documented VaultChat exchange between Holt and Edgerton (Ridgecrest) is dated March 14, 2017. This data source is discussed further in Section IX.A.
3. Shared Network Drives. The U.S. Specialty Minerals Division maintains shared network drives at its Reno, Nevada office containing pricing files, bid files, market-analysis reports, meeting materials, and other business documents. These shared drives are organized by functional area (Sales, Pricing, Marketing, Finance) and are accessible to division personnel based on role-based permissions. Collection from shared drives will require coordination with TMC IT to identify relevant directory structures and access permissions.
4. CRM System. TMC's customer relationship management platform contains customer records, contact information, sales activity logs, pipeline data, bid-tracking information, and customer-specific notes. The CRM system is a critical data source for Categories 3 (Customer/Sales Records) and 9 (Bids/RFPs). Data extraction will require coordination with the CRM system administrator to generate structured exports covering the full ten-year period.
5. ERP System. TMC's Hollowell & Co.-based enterprise resource planning system maintains transaction-level data for financial and operational activities, including revenue, cost of goods sold, purchase orders, invoices, and product-level reporting. The ERP system is the primary source for Category 8 (Financial and Accounting Records) and will also support the production of transactional data for Categories 3 and 9. Data extraction will require coordination with TMC's Hollowell & Co. system administrator and the finance team.
6. Contract Management System. The U.S. Specialty Minerals Division uses a contract management database to store executed customer contracts, amendments, pricing agreements, and related documents. This system is a primary source for Category 3 (Customer/Sales Records). Collection will require a full export of the database's document repository.
7. Personal Devices. Laptops, mobile phones, and tablets issued by TMC to key custodians may contain locally stored documents, messaging data (including VaultChat), and other responsive materials. An assessment must be conducted to determine which custodians used corporate-owned devices versus personal devices under a bring-your-own-device ("BYOD") policy. For corporate-owned devices, TMC has possession and control; for BYOD devices, the question of TMC's ability to compel device access or forensic imaging is more complex. Of particular concern is the status of devices used by Gavin Holt. If Holt used a personal device for VaultChat and did not return any corporate devices upon separation, TMC's ability to recover device-level data may be limited.
8. Cloud Storage. TMC personnel may have used Cobalt Ridge Systems, Aldermere Systems, or other cloud-based storage repositories to store or share documents. These repositories are part of the Ashgrove Software environment and can be collected in conjunction with the email collection. A review of cloud storage usage by Tier 1 and Tier 2 custodians should be included in the data-mapping exercise.
9. Physical Files. Paper records maintained at the U.S. Specialty Minerals Division's Reno, Nevada office may include original executed contracts, meeting notes, trade-association materials, and other documents that were not digitized. Physical file collections will require on-site review by C&H personnel or Redstone Digital Forensics to identify and scan responsive paper documents.
10. HR Records. TMC's Human Resources department maintains personnel files, organizational charts, training records, and separation agreements. These records are the primary source for Category 7 (Organizational Documents and Personnel Records) and are also relevant to Category 6 (Corporate Policies and Compliance) to the extent they contain training attendance records and compliance certifications.
11. Travel and Expense Systems. TMC's corporate travel booking and expense reporting platforms contain records of employee travel authorizations, flight and hotel bookings, expense reports, and receipts. These records are relevant to Category 4 (Trade Association Documents) and Category 2 (Communications with Competitors), as they may document travel to NASMC conferences or other events where meetings with competitor personnel occurred.
A complete inventory of all identified data sources, including estimated data volumes and collection feasibility notes, is provided in Appendix C to this memorandum.
VI. Privilege and Confidentiality Considerations
The production of documents in response to a grand jury subpoena requires careful attention to privilege and confidentiality protections. This section addresses the principal privilege and confidentiality issues relevant to the Subpoena.
A. Attorney-Client Privilege
Communications between TMC personnel and Priya Anand (General Counsel) or other in-house counsel are protected by the attorney-client privilege to the extent they (i) were made for the purpose of seeking or providing legal advice, (ii) were intended to be confidential, and (iii) have not been disclosed to third parties in a manner that would waive the privilege. Given Ms. Anand's dual role as General Counsel and a business executive, there is a heightened risk of privilege disputes regarding communications that may have both legal and business dimensions. Careful review will be required to distinguish privileged legal-advice communications from non-privileged business communications.
Communications between TMC and Calderwood & Harkness beginning February 18, 2022, the date of C&H's engagement, are privileged. Additionally, to the extent TMC communicated with any prior counsel regarding the investigation or antitrust compliance matters before engaging C&H, those communications may also be protected by the attorney-client privilege and should be identified and preserved.
We recommend early identification and segregation of General Counsel's files and any other files reflecting consultation with in-house or outside counsel. A dedicated privilege review team will be established as part of the document review protocol to ensure consistent and defensible privilege determinations across the full document population.
B. Work-Product Doctrine
Documents prepared in anticipation of litigation or for trial — including this memorandum, C&H's internal investigation analyses, and any memoranda, notes, or compilations prepared by C&H or TMC's legal department in connection with the grand jury investigation — are protected from disclosure under the work-product doctrine. See Fed. R. Civ. P. 26(b)(3); Hickman v. Taylor, 329 U.S. 495 (1947).
However, the work-product doctrine does not protect underlying facts, and its application requires that the document was prepared "because of" the prospect of litigation rather than for ordinary business purposes. Dual-purpose documents — that is, documents that serve both a business function and a litigation-preparation function — require particularly careful analysis. A business document that was independently created in the ordinary course of TMC's operations does not become protected work product merely because it is subsequently identified, collected, or reviewed in the context of the investigation. Conversely, a document prepared by TMC's legal team specifically to analyze the company's legal exposure in connection with the investigation would qualify for work-product protection.
C. FRE 502(d) Order
Given the volume of documents to be produced (estimated at 400,000 to 600,000 documents), the risk of inadvertent disclosure of privileged materials during rolling productions is substantial. We strongly recommend seeking a court-ordered clawback agreement under Federal Rule of Evidence 502(d), which provides that a federal court may order that the privilege or protection is not waived by disclosure connected with the litigation pending before the court, regardless of whether the disclosure was inadvertent.
An FRE 502(d) order would protect TMC against the argument that the inadvertent production of a privileged document constitutes a waiver of privilege not only as to the specific document produced but also as to all other communications on the same subject matter. This protection is particularly important in the context of a grand jury investigation, where the DOJ may seek to use any waiver argument to obtain access to TMC's communications with counsel.
We recommend coordinating with Trial Attorney Kowalski and Senior Trial Attorney Reeves to negotiate a stipulated clawback protocol, which can then be submitted to the presiding court for entry as an order. This coordination should occur concurrently with the extension-request discussions.
D. Cross-Border Considerations
TMC is a Canadian corporation, and some responsive documents may reside on servers physically located in Canada or may involve the personal data of Canadian employees. The production of such data to a U.S. grand jury raises potential issues under Canadian privacy law, specifically the Personal Information Protection and Electronic Documents Act ("PIPEDA"), which governs the collection, use, and disclosure of personal information in the course of commercial activities.
Under PIPEDA, the transfer of personal information to a foreign jurisdiction for use in legal proceedings generally requires that the transferring organization comply with PIPEDA's accountability and safeguarding principles. While PIPEDA does not contain an outright prohibition on cross-border data transfers, it requires that organizations ensure an adequate level of protection for personal information that is transferred, and individuals whose data is transferred must be informed of the transfer and its purposes through the organization's privacy policies.
TMC US, as the entity served with the Subpoena, is a U.S. entity, and documents within TMC US's direct possession, custody, or control are clearly within the scope of the Subpoena. However, documents maintained exclusively by the Canadian parent or other non-U.S. subsidiaries present a more complex question. Under the "possession, custody, or control" standard applicable to federal subpoenas, a party's "control" includes not only documents in its physical possession but also documents that it has the legal right, authority, or practical ability to obtain from a non-party. See In re Citric Acid Litig., 191 F.3d 1090, 1107–08 (9th Cir. 1999). Because TMC US is a wholly owned subsidiary of TMC, the DOJ is likely to argue that TMC US has the practical ability to obtain responsive documents from its parent, bringing those documents within the scope of the Subpoena.
We recommend collecting responsive documents from TMC's Canadian systems to the extent such documents are identified, subject to a thorough analysis of PIPEDA implications and any blocking-statute arguments that may be available. A briefing on these cross-border issues will be prepared for Elaine Forsythe's review.
VII. Volume Estimation and Production Timeline
A. Aggregate Volume Estimate
The following table summarizes our preliminary estimates of the responsive document volume for each of the nine document-request categories in the Subpoena. These estimates are based on our initial assessment of the identified data sources and custodians and are subject to revision following the forensic collection and processing conducted by Redstone Digital Forensics.
After global de-duplication (removing exact duplicate copies of documents that appear across multiple custodian data sets), email threading, and the removal of system files and non-responsive file types (the "de-NISTing" process), we estimate that the total responsive universe will be approximately 400,000 to 600,000 unique documents. The upward adjustment from the pre-deduplication range reflects the expectation that additional responsive documents will be identified during the processing phase as email threads are expanded, embedded attachments are extracted, and compressed archives are processed.
The total estimated page count for this document population is approximately 2 to 4 million pages, based on an average document length of approximately 5 to 7 pages.
These estimates are preliminary. Actual volumes will depend on the results of Redstone Digital Forensics' collection and processing activities. Redstone was formally engaged on March 15, 2022, and is expected to provide initial processing metrics by the end of March 2022.
B. Proposed Rolling Production Schedule
Given the volume of responsive materials and the need to ensure thorough privilege review before any production, we propose the following rolling production schedule:
First Production (Target: Early April 2022). The first production will focus on Priority Tier 1 custodians and the two highest-priority document categories: Category 1 (Pricing Documents) and Category 2 (Communications with Competitors). Based on our volume estimates for these categories across the five Tier 1 custodians, we anticipate that the first production will encompass approximately 40,000 to 50,000 documents. This projection aligns with the first rolling production ultimately delivered on April 4, 2022, which consisted of approximately 42,000 documents.
Second Production (Target: May–June 2022). The second production will cover the remaining Category 1 documents, as well as Category 3 (Customer and Sales Records) and Category 9 (Bid and RFP Documents) from Tier 1 custodians. This production is expected to encompass the bulk of the customer-facing and bid-related documents, which are the next-highest priority for the DOJ's investigative needs.
Third and Subsequent Productions (Target: July–December 2022). The remaining productions will cover Tier 2 custodian data, the remaining document categories (Categories 4 through 8), and any supplemental collections identified during the review process. These productions will be scheduled on a rolling basis, with target intervals of approximately four to six weeks between productions.
Completion Target. All rolling productions are targeted for completion by approximately Q4 2022 (October–December 2022), subject to the scope and timing of any supplemental DOJ requests that may arise during the course of the investigation.
The C&H letter to the DOJ dated February 22, 2022, requested a 60-day extension of the initial return date specified in the Subpoena. The rolling production schedule described above should be confirmed with the DOJ upon receipt of the extension response, ideally through a negotiated production-schedule agreement.
VIII. Vendor Coordination
C&H has engaged Redstone Digital Forensics Inc. to serve as the primary forensic collection, processing, hosting, and managed review vendor for this matter. Redstone is headquartered at 7925 Jones Branch Drive, Suite 600, McLean, Virginia 22102, and the engagement is being managed by Project Director Neil Ashworth. The retention agreement was executed effective March 15, 2022.
Redstone's scope of work includes the following:
(a) Forensic Collection. Redstone will conduct the forensic collection of data from all identified data sources, including email archives, VaultChat data (forensic recovery), shared network drives, CRM and ERP system exports, personal devices, cloud storage, and physical file scanning. Collection protocols will follow industry-standard forensic best practices, including chain-of-custody documentation, write-blocking for device imaging, and hash-value verification.
(b) Processing. Collected