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Colorado Attorney General Civil Investigative Demand Subpoena Issued under the Colorado Consumer Protection Act (CCPA)

Many individuals and businesses who receive or are served with a subpoena (also known as a civil investigative demand) from the Colorado Attorney General (or the district attorney) for alleged violations of the Colorado Consumer Protection Act (CCPA) typically wonder what this document is and what to do with it (and of course at times why they’re receiving it in the first place). The subpoena from the Attorney General can be either a subpoena to produce documents or a subpoena to appear at a hearing to provide sworn testimony to aid in the investigation of violations of the CCPA, or both. These subpoenas can be directed at both targets of an investigation and also witnesses.

            The Colorado AG is authorized by Colorado statutes to enforce certain consumer protection laws, including the CCPA (sections 6-1-101 et seq., C.R.S. (2018)), by conducting civil law enforcement investigations and by prosecuting violations. The remedies for these violations are injunctions, disgorgement, restitution, civil penalties, and attorney fees and costs. There is little in the statutes guiding (or limiting) either the request for documents or the process of providing sworn testimony. The statutory standard for commencing an investigation, including the associated powers granted to the AG, is whether the AG has “reasonable cause” to believe that any person (individual or entity) has or is engaged in any deceptive trade practice. This person can reside in Colorado or in another state.

 If a person ignores or fails to respond to the subpoena, the AG can file a motion with the district court to enforce the subpoena and obtain mandatory attorney fees and costs the AG incurred in having to file the motion.

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The AG may commence an investigation if he has “reasonable cause” that there’s been a deceptive practice as outlined in section 6-1-105 of the CCPA. Section 105 lists a laundry list of specific deceptive practices, most of which apply only in very narrow circumstances. The first order of business then is to evaluate whether the person’s alleged conduct even falls within any of these deceptive practices. Only a handful of the provisions have broader application and apply to more general misrepresentations or omissions in dealing with the public.

An individual or business under investigation might understandably wonder what the “reasonable cause” is that prompted the subpoena and investigation. While most AG investigations are generated as a result of consumer complaints, the AG does not need to reveal these complaints to the person under investigation and such complaints are exempt from open records requests. If the AG has to go to court to enforce the subpoena, the AG might at that point reveal the nature and source of the complaints, but not always. A person seeking to keep the investigation confidential must be mindful of challenging in court the subpoena, which can open the investigation to the public through the court system. And the person failing to comply with the subpoena will face mandatory attorney fees and costs if the AG is successful. Also, by failing to comply, the person faces the risk that the court can grant injunctive relief enjoining the business pending compliance with the subpoena.

Under Colorado law, section 6-1-111, the Attorney General has the discretion to keep the investigation confidential. However, nothing in this statute or elsewhere precludes the Attorney General from making the investigation public. As noted above, a sure-fire way to lose any confidentiality about the investigation is to challenge the subpoena in court, which then results in a public judicial proceeding. In my 9 years of experience at the AG, I am unaware of any time the AG disclosed to the public a confidential investigation outside of the subpoena enforcement process.

Colorado case law regarding AG Subpoenas

There are few guideposts for the scope of a subpoena issued by the AG. According to the Colorado Supreme Court a subpoena for documents issued under § 6-1-108 must be “necessary to administer the provisions of the Consumer Protection Act.” People ex rel. MacFarlane v. Am. Banco Corp., 194 Colo. 32, 38 (1977). The subpoena must be definite, not overbroad, and relevant to the purposes of the investigation. Id. at 39.

The requirement that the subpoena be definite and not overbroad is satisfied by a showing that the subpoena’s language exhibit such particularity of description that the person subpoenaed be able to know what he is being asked to produce and that there be such particularity of breadth that good faith compliance would not be unduly burdensome.  570 P.2d at 830. “The requirement of relevancy is met by a showing that a relationship exists between the documents which must be produced and the purposes of the inquiry.”  Id; see also Benson v. People, 703 P.2d 1274, 1279 (Colo. 1985) (analyzing a similar civil investigative demand under a different statute and concluding that “[t]he relevancy requirement is met if the government makes a prima facie showing that the requested documents bear some general relationship to the subject matter of the investigation”).

Subpoena Enforcement Proceedings

            There are three important considerations for these proceedings when a person fails to comply with an AG subpoena. First, the rules of civil procedure may not apply to the AG’s application for an order enforcing an investigative subpoena, though this specific issue has not been resolved as applied to the CCPA. Administrative subpoena enforcement actions are summary in nature and not subject to the rules of civil procedure. People ex rel. Orcutt v. District Court, 435 P.2d 374, 377 (Colo. 1967). See also Feigin v. Colorado National Bank, 897 P.2d 814, 819 (Colo. 1995) (holding that the rules of civil procedure do not apply to subpoena enforcement actions by the securities commissioner); C.R.C.P. 81(a) (“These rules do not govern procedure and practice in any special statutory proceeding insofar as they are inconsistent or in conflict with the procedure and practice provided by the applicable statute.”). Second, if the AG is successful in enforcing the subpoena, he is entitled to a mandatory award of attorney fee and costs. State ex rel. Coffman v. Vaden Law Firm LLC, 2015 COA 68, ¶ 15 (“[W]e conclude that section 6–1–113(4) unambiguously requires an award of attorney fees and costs in the State's favor when it successfully enforces its right to subpoena information pursuant to sections 6–1–108 and –109.”). Third, challenging an AG subpoena jeopardizes the confidential nature of the investigation and could jeopardize the person’s business.

Conclusion

            The CCPA appears to provide the AG with broad authority to investigate alleged deceptive trade practices so long as he has “reasonable cause” that there’s a deceptive trade practice. But it is imperative for a person receiving a subpoena to understand and hopefully obtain clarification from the AG regarding the precise nature of the alleged deceptive conduct and what provision or provisions of the CCPA are implicated. Unlike many states, Colorado does not have a general unfairness and deceptive trade practice provision, under which many types of conduct could fall, and so the Colorado AG has to make the alleged deceptive conduct fit into one of the narrow provisions in section 6-1-105. Working cooperatively with the AG’s office to obtain this information and to narrow the burdens of the subpoena are always advisable and can save clients significant time and money—and in some cases their business. I witnessed first-hand businesses who did not have the right approach to responding to subpoenas in particular and investigations in general and the significant damage it caused their business.

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Statutory Authority (sections 6-107, 108, and 109 of the CCPA)

●          § 6-1-107, C.R.S. (2018)

When the attorney general or a district attorney has reasonable cause to believe that any person, whether in this state or elsewhere, has engaged in or is engaging in any deceptive trade practice listed in section 6-1-105 or part 7 of this article, the attorney general or district attorney may . . .

(a) Request such person to file a statement or report in writing under oath or otherwise, on forms prescribed by him, as to all facts and circumstances concerning the sale or advertisement of property by such person and any other data and information he deems necessary;

(b) Examine under oath any person in connection with the sale or advertisement of any property;

(c) Examine any property or sample thereof, record, book, document, account, or paper he deems necessary;

The CCPA broadly defines “property” as any real or personal property, intangible property, or services.

●          § 6-1-108, C.R.S. (2018)

(1) When the attorney general or a district attorney has reasonable cause to believe that a person, whether in this state or elsewhere, has engaged in or is engaging in a deceptive trade practice listed in section 6-1-105 or part 7 of this article 1, the attorney general or a district attorney, in addition to other powers conferred upon him or her by this article 1, may issue subpoenas to require the attendance of witnesses or the production of documents, administer oaths, conduct hearings in aid of any investigation or inquiry. . . .

●          § 6-1-109, C.R.S. (2018)

(1) If any person fails to cooperate with any investigation pursuant to section 6-1-107 or fails to obey any subpoena pursuant to section 6-1-108, the attorney general or a district attorney may apply to the appropriate district court for an appropriate order to effect the purposes of this article 1. The application shall state that there are reasonable grounds to believe that the order applied for is necessary to investigate a deceptive trade practice as defined in this article 1. If the court is satisfied that reasonable grounds exist, the court in its order may:

(a) Grant injunctive relief restraining the sale or advertisement of any property by such person;

(b) Require the attendance of or the production of documents by such person, or both;

(c) Grant such other or further relief as may be necessary to obtain compliance by such person.

 

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Erik Neusch was a former assistant attorney general with the Colorado Attorney General’s office from 2009 to 2018 in the consumer protection section, where he served as lead counsel on some of the largest investigations and trials, leading to the recovery of the most restitution, attorney fees, and fines and the largest collected judgment in the history of consumer protection actions by the Colorado Attorney General.