ASA Member Bulletin - July 2017 - Responding to an Administrative Subpoena
Many administrative agencies have subpoena power. This means that they can send you a subpoena insisting that you give testimony, or (more commonly for administrative subpoenas) provide documents.
The first step in responding to an administrative subpoena is to issue a "litigation hold" within the company. This is a written notice to your staff directing them to preserve any documents, records, or other information that may be responsive to the subpoena. Rather than relying on the staff to identify what is responsive, companies typically want to prevent the staff from destroying any records, except under the direction of an attorney. This also may mean turinging off systems that automatically dispose of records. For example, if your system automatically deletes emails after a certain period, or if you periodically purge records, then those mechanisms should be turned off until a legal review can determine the right course of action (and don’t be surprised if the legal review insists that those purging systems stay off for the duration of the investigation). Litigation holds can include both electronic records and paper records and can even apply to handwritten notes.
The second step in responding to an administrative subpoena is to talk to a lawyer (this is interchangeable with step one - they should happen at about the same time - the lawyer's help may be quite useful in issuing the internal hold message). There are many reasons for this, but one of them is that not all subpoenas are created equal. It is possible that you might not need to respond, or that the right course of action could be to file a formal motion to quash.
I have encountered both valid and invalid administrative subpoenas over the years. Validity can turn on a wide variety of factors. Sometimes the subpoenas are issued by parties who were not authorized to issue them (rending the subpoena invalid). Sometimes they are overly broad; talking to the administrative agency about their investigative focus can sometimes help narrow the scope of the request to a more reasonable scope. If you do this, though, make sure you record any such agreement about a change in scope in writing, with the government inspector’s written concurrence.
If the administrative subpoena is invalid, then you may wish to move to quash the subpoena. Remember that one remedy for an invalid subpoena is to withdraw it and reissue a valid one, so discuss strategy carefully with your lawyer.
If the administrative subpoena is valid but needs to be amended (needs to be more specific, less over-broad, etc.) then you may want to have your lawyer negotiate an amendment with the issuing agency. Sometimes the subpoena calls for an avalanche of records when the government only needs a small trickle, but the agent who issued the subpoena did not know how to describe the narrow category of records that he or she really wanted.
Remember that you are not always the target of the investigation. An attorney can start to gauge the focus on the investigation by talking with the agency that issued the subpoena. Many aircraft parts distributors have received subpoenas from export agencies because someone else in the chain of commerce is being investigated. But if you are the target of an investigation, your rights in an administrative proceeding may be different than your rights in a criminal proceeding.
Having your attorney speak with the issuing agency is frequently a good move. The investigator who caused the subpoena to be issued has a lot of power to modify the terms of the subpoena in order to (1) make it easier to comply, and (2) by easing compliance, make it more likely that the investigator will get the information that he or she desires.
Do not ignore the subpoena! One aircraft parts distributor did and it cost them $225,000. I know this claim sounds like part of an old-fashioned chain letter (or the modern email version), but in 2010 a distributor settled a claim that they had failed to comply with a subpoena, and it cost them nearly a quarter of a million dollars.
The facts of the case showed that the aircraft parts distributor had submitted 260 pages of responsive documents, but it failed to submit a copy of a post-sale e-mail. The facts also showed that aircraft parts distributor had provided a copy of that email to its lawyer (the public documents did not reveal whether the lawyer was sanctioned for withholding that document). The government even recognized that the company had relied in good faith on the advice of the lawyer in determining not to produce the e-mail. Nonetheless, the company was accused of an egregious violation and ultimately settled the matter for $225,000.