The Federal Trade Commission obtains information through subpoenas and civil investigative demands (CIDs) pursuant to its mission to investigate deceptive and unfair trade practices. Such requests are legally enforceable and the FTC recently issued a warning that recipients of subpoenas or CIDs must take their compliance obligations seriously.
What is a CID
A CID is a kind of subpoena. CIDs seek documents and information. Sometimes, recipients are believed to have violated the law. Other times, the FTC sends “friendly” CIDs to obtain information from those that are not the “subjects” of an investigation, but who may have information related to the subjects of an ongoing investigation.
As a matter of policy, the agency expects companies and individuals that receive compulsory process to respond completely and in a timely manner, or to set forth the obstacles to full compliance.
Don’t Let a CID Turn Into an Enforcement Action
Respond promptly to FTC staff but resist the urge to communicate directly with FTC staff attorneys. Contact an FTC advertising law firm in order to position the matter for optimal resolution, meet and confer with FTC staff in a timely manner, obtain information about the purpose of the investigation, narrow and/or defer the scope of requests, implement document preservation controls and obtain extensions of time so as to minimize business disruption.
Experienced federal agency defense counsel can assess relevant facts and law, and develop strategic arguments aimed at mitigating potential exposure. The FTC tends to move investigations along expeditiously so it is crucial to design a deliberate approach.
Recent Enforcement Actions
The failure to comply with a subpoena or CID can result in, without limitation, the FTC’s Office of General Counsel getting involved in order to obtain judicial enforcement. The FTC typically seeks to compel compliance only after the subpoena or CID recipient fails to meet its obligations after allowing a reasonable extension and where cooperation has completely broken down.
In the past few years, the FTC has filed 12 federal court actions against process recipients that failed to comply fully with the agency’s subpoenas and CIDs. In the 11 actions that have been resolved to date, either the court enforced the subpoena or CID or the FTC settled with the party after they complied with the requests.
In each of these cases, the respondent either failed to respond at all, responded with less than full cooperation, or ignored deadlines set by an FTC attorney. When this sort of behavior impairs an investigation, the FTC is forced to seek judicial enforcement.
Similarly, the FTC expects recipients to comply with FTC orders adjudicating petitions to limit or quash subpoenas and CIDs. If a recipient fails to comply with such an order, the agency will direct the Office of General Counsel to commence enforcement proceedings within 30 days of the established deadline. Subpoena and CID recipients that do not comply promptly with such orders or risk an enforcement proceeding.
FTC v. Tracers Info. Specialists, Inc., Case No. 8:16-MC-18TGW) (M.D. Fla. filed Feb. 12, 2016) (enforcing CID)
FTC v. General LLC, et al., Case No. 3:16-cv-00136-LRH-VPC (D. Nev. filed Mar. 9, 2016) (enforcing CIDs)
FTC v. AFR Financial LLC, Case No. 3:16-mc-45-J-34JRK (M.D. Fla. filed July 29, 2016) (enforcing CIDs)
FTC v. Lexium Int’l, LLC, et al., Case No. 2:16-mc-00026-JES-CM (M.D. Fla. filed Sept. 16, 2016) (enforcing CIDs)
FTC v. IT Media, Inc., Case No. 2:16-cv-09483 (C.D. Cal. filed Dec. 22, 2016) (enforcing CIDs)
FTC v. Infante, Case No. 4:17-mc-00008-CAB (N.D. Ohio filed Feb. 7, 2017) (settled upon compliance)
FTC v. Humana, Inc., Case No. 1:17-mc-01465-ESH (D.D.C. filed June 19, 2017) (settled upon compliance)
FTC v. Redwood Scientific Technologies, Inc., Case No. 2:17-cv-07921-SJO-PLA (C.D. Cal. filed Oct. 30, 2017) (enforcing CID)
FTC v. Donor Relations, LLC, et al., Case No. 2:18-cv-00183-GMN-CWH (D. Nev. filed Feb. 1, 2018) (enforcing CIDs)
FTC v. Bartoli, Case No. 6:18-mc-00027-PGB-GJK (M.D. Fla. Apr. 16, 2018) (enforcing CID)
FTC v. Fully Accountable, LLC, Case No. 5:18-mc-00054-SL (N.D. Ohio filed June 8, 2018) (enforcing CID)
FTC v. Swain, et al., Case No. 2:18mc20 (E.D. Va. July 19, 2018) (settled upon compliance)
Takeaway: FTC staff will often work with subpoena and CID recipients to determine the proper scope of the investigation and arrive at a mutually agreeable compliance plan. Recipients should timely meet and confer with FTC lawyers to identify any issues, problems, or concerns that might affect the ability to comply. Based on the results of the crucial meet and confer process, FTC staff may agree in writing to limit some of the requests or to extend the deadline for compliance. Experienced consumer protection defense counsel may be able to modify certain obligations in the demand while formulating an aggressive and persuasive response plan.
Contact the author at rnewman@hinchnewman.com if you are the subject of a FTC investigation or enforcement action.
Richard B. Newman is an Internet marketing attorney and FTC defense lawyer at Hinch Newman LLP.
Attorney Advertising. Informational purposes only. Not legal advice.