With all the talk in the media about grand jury subpoenas, it’s important to understand that subpoenas aren’t the only way that the government can demand documents and testimony.
One of the little-known but often-used methods is a Civil Investigative Demand or CID. This is a written demand by the government either for documents, for written responses to questions or for in-person testimony.
Just like in the grand jury context, it’s critical to protect the attorney-client privilege when responding to a CID. If you produce information that is privileged when responding to a CID, you will waive the privilege forever.
The government, however, cannot use a CID to demand production of privileged information. So why does the statute (and government investigators) make it nearly impossible for a company to protect its attorney-client privilege when it comes to CIDs?
CIDs are creatures of statute—31 U.S.C. § 3733. The statute defines all sorts of fun rules, such as:
- Who can issue a CID (the Attorney General “or a designee”)
- What must be included in the CID (description of the “nature of the conduct” that is a supposed violation, the law violated, the documents requested)
- How a CID may be served (by a U.S. Marshal)
And so forth.
The Statute Protects Attorney-Client Privilege (But See Below)
Section 3733 also has a section defining “protected material or information.” (31 U.S.C. § 3733(b)). This section state that a CID
(1) In general.—A civil investigative demand issued under subsection (a) may not require the production of any documentary material, the submission of any answers to written interrogatories, or the giving of any oral testimony if such material, answers, or testimony would be protected from disclosure under—
(A) the standards applicable to subpoenas or subpoenas duces tecum issued by a court of the United States to aid in a grand jury investigation; or
(B) the standards applicable to discovery requests under the Federal Rules of Civil Procedure, to the extent that the application of such standards to any such demand is appropriate and consistent with the provisions and purposes of this section.
Rule 26 of the Federal Rules of Civil Procedure prevents privileged documents from disclosure. Therefore, CIDs may not demand production of information protected by the attorney-client privilege.
So How Does the Statute (and the Government) Block the Privilege?
The problem is a later subsection of the statute, section 3733(h)(2).
For “oral examinations” (or on-the-record interviews), the government “shall exclude from the place where the examination is held” everyone except
- The person giving the testimony
- “The attorney for and any other representative of the person giving the testimony”
- The attorney for the government
- “Any person who may be agreed upon by the attorney for the Government and the person giving the testimony”
- The officer before whom the testimony is given
- The stenographer
In case you missed them, the two key sections are in red.
The person giving the testimony clearly has a right to have his or her personal attorney attend. In fact, § 3733(h)(7) says that the person compelled to testify “may be accompanied, represented, and advised by counsel.”
The witness’s lawyer can object to questions if they ask for privileged information.
So far, so good.
But what about the situation where the witness works for a company and the company wants to assert its privilege?
The problem is that § 3733 doesn’t require the government to allow the company’s lawyer into the room. The company’s lawyer isn’t on the list of people who can attend in § 3733(h)(2).
The government often takes advantage of that failure to block the company’s lawyer from attending the testimony.
It’s important to keep in mind that the company is usually the target of these investigations, not the individuals. CIDs are used very often in False Claims Act cases and those are focused on the entity that made the “claim” to the government.
Limiting the Privilege
I’ve written before about the government’s hostility towards the attorney-client privilege. This is another example of it.
The CID statute does not say that the company’s lawyers cannot attend. (Sorry about the double negative.) In fact, if the witness and the government agree, then “any person” can attend the examination. That would include the company’s lawyers.
You may be thinking, well, the witness can assert the company’s privilege, so this is not really a problem.
Yes, sometimes the privilege is very clear and any lawyer can recognize and assert it.
But sometimes it’s not so clear. Sometimes you need to possess deep knowledge of the inner workings of the company or the scope of past legal advice that has been given to the company to recognize privileged information.
As a practical matter, we cannot expect the witness’s lawyer to do the company’s work. The witness’s lawyer is focused—correctly—on protecting the witness, not on protecting the company. That means that she’s primarily listening for questions and answers that may harm her client, not ones that may harm her client’s employer.
More troubling, the interests of the employee-witness and the company are not always aligned. The witness may want to waive the privilege to harm the company or in an effort at self-preservation (aka CYA).
I heard one lawyer recount a horrifying story where a lawyer for a company agreed to an interview with the government (without telling the company) because he was scared of the consequences of not cooperating. He then proceeded to waive the privilege all over the place. The company couldn’t walk it back. The privilege was gone and the company had no opportunity to assert it.
A company’s lawyers should be permitted to attend the interview, particularly when there’s a good faith belief that the government may ask questions that may elicit privileged information.
The effect of stopping the company’s from attending is to make it easier for the government to seek a waiver (inadvertent or not) of the privilege. That’s not right. That shouldn’t be a valid reason for excluding the company’s lawyers from the testimony.
(Wait, there is another reason. To keep the company from understanding the scope of the investigation and to develop a defense to the allegations. But that’s a post for another day.)
The statute doesn’t stop the company’s lawyers from attending—the government could simply agree to it. Everyone could agree on ground rules to keep the company’s lawyers from interfering with the interview—such as allowing objections only for privilege and not for relevance.
There is an imperfect workaround for situations where the government refuses to allow the company’s lawyers in the room: use the grand jury solution. For any question where the answer may be privileged, have the witness and the witness’s lawyer come out of the room to call or talk to the company’s lawyers. Then go back in and assert the privilege (or not, as the case may be).
For this solution, you need a witness willing to cooperate with the company, and a lawyer for the witness savvy enough to navigate an awkward situation. For situations where that doesn’t exist or you are worried that the witness will not be cooperative, the only solution is to go to court and challenge the exclusion of the company’s lawyers from the room. (Some courts have already rejected this argument – see, unfortunately, In re Oral Testimony of a Witness Subpoenaed Pursuant to Civil Investigative Demand No. 98-19, 182 F.R.D. 196, 204 (E.D. Va. 1998)).
It’s too bad the government’s hostility to assertions of the attorney-client privilege make this so complicated. The simplest solution is to allow all parties to protect their privilege.