04.5.2016 | Articles / Publications
InsideCounsel: Civil Investigative Demands: What to Expect and How to Respond
In an article published by InsideCounsel on April 1, 2016, Benjamin Coulter provides insight on practical steps that a company responding to a civil investigative demand (CID) can take to both comply with the CID and soften its potential impact.
The steps Coulter discusses include defining the scope of the CID, involving an electronically stored information vendor and facilitating a specific technical discussion with the assistant U.S. attorney responsible for the CID. Coulter explains, “You can expect a CID to be broad ranging and invasive. To make matters worse, there is very little time to formally challenge a CID.” He emphasizes the importance of cooperation and credibility, combined with drawing the line in certain instances, as these are likely to soften the impact of a CID on a company.
Civil Investigative Demands: What to Expect and How to Respond
By Benjamin B. Coulter
Federal law permits the United States Department of Justice (DOJ) to issue civil investigative demands (CIDs) “[w]henever the Attorney General, or a designee…has reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation.” A type of subpoena, CIDs allow the DOJ to obtain documents, require responses to interrogatories and take depositions. Understandably, receipt of a CID may cause a company great concern because the CID signals that a false claims investigation is in progress. You can expect a CID to be broad ranging and invasive. To make matters worse, there is very little time to formally challenge a CID.
But it doesn’t have to be the end of the world. There are practical steps that a company responding to a CID can take to both comply with the CID and soften its potential impact. Working informally but deliberately, you can limit the disruption, risk and overall cost of responding to a CID.
The first step in responding to any CID is defining its scope. When you receive a CID, you should reach out early to the Assistant United States Attorney (AUSA) responsible for the CID to try to determine the claims at issue and what information and documents the company will need to preserve. To ensure the discussion is productive, you will first need to research the information your company has in its possession, custody or control, identify which document custodians might have documents responsive to the CID, and identify the key players at the company.
Ideally, you should involve an electronically-stored information (ESI) vendor to analyze the information your company has stored so that you have concrete analytics to justify limiting document retention and production. Being able to say “we have 200,000 potentially responsive documents but only 50,000 potentially responsive documents with the main five custodians” will go further than simply complaining about the potential burden. In addition, an ESI firm will usually have an expert that can testify or at least complete an affidavit that supports your search and imaging analytics if the government or relator argue that your search was not complete.
Once you have solid information in hand, you should have a specific technical discussion with the AUSA, who will generally be cooperative if approached with honey rather than vinegar, and with concrete data. Usually, your goal should be to negotiate a custodian by database limit (e.g., we will preserve Managers A, B, and C’s emails) within a specific time range. You should also try to reach an agreement to allow a rolling document production. This will lessen the burden on your company to meet deadlines and will allow more flexibility as the investigation continues, preventing locking in unnecessary work and cost. Importantly, you should document your agreement about the scope of the CID. The investigation may move from one AUSA to another, and even if it doesn’t, it’s easy for one side or the other to forget the terms of the agreement if it is not memorialized.
After reaching an agreement, your company must then make every effort to comply with the terms of the agreement and understanding of the CID. Good faith progress and communication with the AUSA about what the company will be able to produce will likely engender continued cooperation with the AUSA, and any needed modifications to your plan in responding to the CID.
A CID may also require interrogatory responses and / or depositions. The process for responding to interrogatories is relatively straightforward. If, however, a CID calls employees to testify, those employees may decide to assert their Fifth Amendment right not to incriminate themselves or may decide to testify. Either option poses risks to a company because courts may allow an adverse inference to be taken against a company when its employees (or even former employees) assert their Fifth Amendment rights, while the government may try to use a witness’s damaging oral testimony at trial, citing Fed. R. Evid. 802(1), Fed. R. Civ. P. 32, and / or other provisions. Regardless of trial, the process of giving oral testimony can be daunting and may have the effect of widening or narrowing the scope of an investigation.
Significantly, the DOJ may insist that a deposition be given at its chosen location, require the witness to read and sign a transcript, and may refuse to allow the witness to have the transcript. Though the witness is allowed to be represented by counsel, the government may exclude the company’s lawyers from the testimony. For that reason, it is important to determine who specifically represents the witness and to allow that person adequate time and support to prepare a person giving testimony.
No company wants to receive a CID. But if it receives one, a company can be proactive in responding to it and lessen the risks and costs of responding. Cooperation and credibility, combined with drawing the line in certain instances, are likely to soften the impact of a CID on your company.
Ben Coulter is an attorney at Burr & Forman LLP practicing in the General Commercial Litigation Group. His practice primarily involves the defense of banks, credit unions, brokers and other financial institutions in securities litigation and other commercial matters. He also defends medical providers in medical malpractice actions and medical providers in litigation and regulatory matters. He may be reached at (205) 458-5420 or by email at email@example.com.
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