Civil Investigative Demands(Anatomy and Implications)

Peter A. Nolan

Dawn E. Norman

Winstead PC

Austin, Texas

April 25, 2013

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Civil Investigative Demands

Demand for Information by the Texas Attorney General's Office.

Information like that which would be subject to pretrial discovery.

Production of documents, interrogatories, and oral statements.

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The Recipient– "Person" –broadly defined– (DTPA) possible DTPA violation

Demand for documents under Texas Deceptive Trade Practices Act §17.61

Demand for Reports and Examinations under DTPA §17.60

Request to examine books and records of a company under Business Organizations Code §12.151

Types of Civil Investigative Demands

Civil Investigative Demands (CID)

The Recipient− "Person" – broadly defined to include individuals

and entities− (DTPA) possible DTPA violation

Service - §17.61(d)– delivering an executed copy to the person or the

place of business

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DTPA CID

Scope – Only production of documents-§17.61(a)

Distinguished from §17.60 Demand

– No oral testimony– Few express protections

DTPA CID

Information Subject to Production– "any documentary material relevant to possible

DTPA violation"-§17.61(a)– Subject matter, statute/section, and class of material

for production- "reasonable specificity" -§17.61(b)– Permissive applicability of TRCP - "may contain"

Deadlines– No express restrictions– No "reasonable period" requirement

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DTPA CID

Response– Work with Attorney General– Comprehensive/good faith– Documents - make available for

inspection/copying§17.62(e)– No express provision regarding expenses– Agreements between Attorney General/Respondent

are common

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DTPA CID Challenges/Resisting

Petition to Modify/Set Aside– District court of residence or Travis County– 20 days– Filing does not toll response deadline w/o court

order-§17.61(g)

Attorney General Suit– Failure to comply– Compel Response– Intent to Evade

Misdemeanor, $5,000 fine, 1 year jail

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DTPA CID Challenges/Resisting

Privileged/Confidential Information– Disclosure to "authorized employee" of Attorney General– Used by Attorney General "before any court"– Exempt under Public Information Act TEX. GOV'T CODE

§552.101– Trade secrets - court approval and "adequate notice"– Records may be maintained by Attorney General indefinitely

Potential Future Disclosures– Other litigation with "good cause"– Outside of litigation, Attorney General not required to give notice

of disclosure

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DTPA Demand for Reports and Examinations

Scope – Separate from DTPA CID statute– No requirement for "reasonable belief" that relevant

information exists– Engaging in, has engaged in, is about to engage in

DTPA violation or within public interest– Silent on service and notice– Person still broadly defined

DTPA Demand

Investigation Methods– Answers to written questions under oath-§17.60(1)– Examination under oath-§17.60(2)– Examine merchandise-§17.60(4)

Response Deadline– Silent on timing– No express standards governing Attorney General

discretion on deadlines

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DTPA Demand Challenges/Resisting

Challenging Demand– No express process for objecting or seeking court

intervention– Attorney General retains same remedies and

punishment options as for DTPA CID

Other Potential Pitfalls for Respondent– No right to copy of testimony– No express right to attorney representation– No express protection of trade secrets, privileged or

confidential information

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DTPA Demand Challenges/Resisting

Protections– Agreement with Attorney General– Seek protection from Court when Attorney General

demands information – Declaratory judgment that Attorney General is not

entitled to informationPrivileged/Confidential Information

– No express provisions protecting confidential info– Attorney General interprets §17.60 to mean documents

may be subject to disclosure– Get agreement of Attorney General (perhaps return of

documents)– Get court order

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AG Examination Request

Authority/Scope – Texas Business Organizations Code– Examine books/records of any TX entity or foreign

entity registered in TX-§12.151

Service/Notice– Triggered by a "Visitorial Letter"-§12.152

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AG Examination Request

Response – Must "immediately permit" examination– No express mechanism for judicial relief– Applies to records in and out of state– Respondent subject to forfeiture for failure to comply– Officer may be personally liable/Class B

misdemeanor for refusing to allow Attorney General examination

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AG Examination Request Challenges/Resisting

Privileged/Confidential Information– Attorney General may disclose in

judicial/administrative proceeding, state suit to revoke registration or collect penalties, or to enforcement officers

– Confidentiality provisions only apply if records requested pursuant to Request to Examine statute

Protections– No statutory method to challenge request – Use declaratory judgment– Agreement with Attorney General

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Questions/Comments

Peter A. Nolan

WINSTEAD PC

401 Congress Ave., Suite 2100

Austin, Texas 78701

Phone: 512-370-2800

pnolan@winstead.com