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A civil investigative demand (\u201cCID\u201d) is the instrument by which the Federal Trade Commission exercises its compulsory process authority in connection with investigations.\u00a0 CIDs may require the production of documents \u2013 including electronically stored information \u2013 or tangible things, the provision of testimony, and the providing of written responses to questions.<\/p>\n
A CID must state the nature of the conduct constituting the alleged violation which is under investigation and the provision of law applicable to such violation.\u00a0 This will be set forth via a section entitled \u201cSubject of the Investigation\u201d and in the \u201cResolution(s) Directing Use of Compulsory Process\u201d that accompany the CID.\u00a0 The FTC is not required to disclose whether the recipient of a CID is a target or to explain the circumstances that prompted the investigation.<\/p>\n
FTC civil investigative demands are often extensive and broad.\u00a0 A skilled FTC CID attorney<\/a> may be able to narrow the scope of information and documentation being sought, and\/or the time frame \u00a0within which to comply, and thus modify the breadth and cost of the investigative process.<\/p>\n The recipient of CID is required to \u201cmeet and confer\u201d with FTC staff counsel within a very tight timeframe.\u00a0 During meet and confer sessions, many CID recipients and their counsel object to one or more areas of inquiry without possessing an accurate understanding of the legal standards and thresholds underlying the objection(s).<\/p>\n For example, threadbare objections such as relevance, burden, cost and breadth are unlikely, by themselves, to persuade staff counsel or FTC Directors.\u00a0 When attempting to modify or narrow the scope of a CID, FTC CID lawyers<\/a> should be prepared to amply demonstrate, as the case may be and without limitation, why a specific specification is outside the scope of the investigation, unnecessary and abusive in breadth, lacks of reasonable time frame within which to comply, threatens disruption and serious hinderance of business operations, includes voluminous records searches, involves increased costs and lost manpower, does not further the FTC\u2019s legitimate inquiry into matters of public interest, involves unreasonable diversion of personnel and financial resources, and\/or seeks disclosure of confidential or proprietary information.<\/p>\n Some common objections include relevance, undue burden and over breadth.<\/p>\n An objection premised upon the CID improperly seeking irrelevant information must set forth persuasive facts that the information being sought is objectively outside the scope of the FTC\u2019s investigation.\u00a0<\/p>\n FTC compulsory process is permissible \u201cif the inquiry is within the authority of the agency, the demand is not too indefinite and the information sought is reasonably relevant.\u201d\u00a0 \u00a0The standard for judging relevancy in an agency investigation is more relaxed than in an adjudicatory\u201d proceeding.\u00a0 At the investigatory stage, the FTC can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.\u00a0 The requested material, therefore, need only be relevant to the investigation \u2013 the boundary of which may be defined quite generally.<\/p>\n Put another way, the requested information must not be plainly incompetent or irrelevant to any lawful purpose\u2019 of the agency.\u00a0 The agency\u2019s own appraisal of relevancy must be accepted so long as it is not obviously wrong.\u00a0 It is a CID recipient\u2019s burden to show that the information is irrelevant.<\/p>\n The FTC will possess a great deal of discretion on the issue of relevance because the agency is not required to explain all the nuances of its investigation to a recipient.<\/p>\n The gist of an undue burden or overbreadth objection is that the disclosures sought are unreasonable and indefinite.\u00a0<\/p>\n FTC investigation process is not unduly burdensome unless compliance threatens to unduly disrupt or seriously hinder the normal operations of a recipient\u2019s business.\u00a0 A CID recipient bears the burden to show how a CID interferes with its ability to operate its business.\u00a0 For example, a recipient that may wish to challenge one or more specifications contained within a civil investigative demand by evaluating the time and expense associated with compliance, and whether compliance threatens to unduly disrupt or seriously hinder normal business operations.\u00a0<\/p>\n A challenger must be prepared to set forth facts underlying such a conclusion.\u00a0 Courts may reject a claim of undue burden where a recipient fails to enunciate how a CID constitutes a fishing expedition.\u00a0 CID recipients that fail to produce factual support to substantiate contentions that compliance would result in the virtual destruction of a successful business (e.g., affidavit or other documentation) are unlikely to persuade FTC staff counsel to modify or narrow a request.\u00a0 Mere statements by FTC defense practice counsel do not provide factual support.<\/p>\n Importantly, absent a showing of disruption, the sheer amount of responsive materials does not demonstrate undue burden (or overbreadth).\u00a0 Often CID recipients unsuccessfully attempt to merely allege that because a CID calls for thousands of documents that constitutes an undue burden.\u00a0 Some burden on CID recipients is, of course, to be expected and is considered necessary in furtherance of the agency\u2019s legitimate inquiry and the public interest.<\/p>\n Any civil investigative demand places a burden on the person to whom it is directed. Time must be taken from normal activities and resources must be committed to gathering the information necessary to comply.\u00a0 Nevertheless, the presumption is that compliance should be enforced to further the agency\u2019s legitimate inquiry into matters of public interest.\u00a0<\/p>\n In terms of an overbreadth objection, broadness alone is not sufficient justification to refuse enforcement of and compliance with FTC compulsory process.\u00a0 Courts have held that the FTC should be accorded extreme breadth in conducting its investigations.\u00a0 Courts have struck down overbreadth challenges where no showing was made that the inquiries sought any information beyond that necessary to determine whether recipients have engaged or are engaging in unlawful acts or practices.<\/p>\n Further, broad CIDs have been justified in comprehensive investigations, particularly where that breadth is in large part attributable to the magnitude of the subject\u2019s business operations.<\/p>\n If you or your company have received an FTC CID, consult with an experienced FTC defense lawyer<\/a> from the start to position your response for an optimal resolution.<\/p>\n Richard B. Newman is an FTC compliance lawyer<\/a> at Hinch Newman LLP.\u00a0Follow FTC defense lawyer<\/a> on National Law Review.<\/strong><\/p>\n Informational purposes only. Not legal advice. This article is not intended to and should be construed as legal advice. May be considered attorney advertising.<\/em><\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":" A civil investigative demand (\u201cCID\u201d) is the instrument by which the Federal Trade Commission exercises its compulsory process authority in connection with investigations.\u00a0 CIDs may require the production of documents \u2013 including electronically stored information \u2013 or tangible things, the provision of testimony, and the providing of written responses to questions. A CID must state […]<\/p>\n","protected":false},"author":1,"featured_media":28859,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11761],"tags":[19571,17697,11619,19569,6594,19570,19567,12630,19568],"dealstore":[],"offerexpiration":[],"class_list":["post-28858","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-affiliate-marketing","tag-cid","tag-civil","tag-demand","tag-ftc","tag-information","tag-investigative","tag-narrow","tag-scope","tag-sought"],"yoast_head":"\n