What’s a Colorado Attorney General Civil Investigative Demand Hearing under the Colorado Consumer Protection Act (CCPA) And Do I Have to Show Up (Yes)?
One of the pre-filing investigative tools that Colorado statutes provide the Colorado Attorney General in investigating potential deceptive trade practices that violate the Colorado Consumer Protection (Act) is the power to compel the attendance of persons to appear and give sworn testimony under oath. A subpoena to appear for a civil investigative demand hearing can be directed at targets of an investigation and witnesses.
In contrast to federal law enforcement agencies such as the DOJ, CFPB, FTC and SEC, however, there are no statutory provisions, regulations, or rules about this process, which leaves lawyers representing clients uncertain how to proceed. (At the end of this article is a list of federal law enforcement agencies and citation to their rules for investigatory hearings.)
If the Colorado AG has “reasonable cause” to believe that any person (individual or entity) has or is engaged in any deceptive trade practice, he can issue not only a subpoena to produce documents but also—separately or together—a subpoena to appear to provide testimony under oath. Service of the subpoena “may be made in the manner prescribed by law or as provided in rule 4 of the Colorado rules of civil procedure.” § 6-1-108(2). If a person fails to respond to the subpoena to appear, 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. § 6-1-109.
Specifically, the statute for the hearing authority provides:
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.
§ 6-1-108(1), C.R.S. (2018), Thus, both a third-party witness or target can be subject to this process if the AG (or district attorney) has reasonable cause to believe a deceptive trade practice has or is occurring.
How, What, Where, and When
The purpose of the hearing is for the assistant attorney general (or the investigator) to ask questions of the person under oath. Typically, a court reporter is present at the request of the AG but not required. These are confidential proceedings so the AG generally allows only the person being examined and her lawyer to be present.
There is nothing in the statute or any rules regarding where the hearing takes place but it generally is at the AG’s office. My team and I conducted well over a 100 of these hearings and they were all at the AG’s office but one due to a medical condition of the witness.
While many attorneys defending clients believe these are depositions, they are not treated as such by the AG. But again there are no rules or procedures for how these hearings occur. As I explained in an earlier article, the rules of civil procedure may not apply to these special pre-filing investigative hearings and procedures. Nevertheless, an attorney may still invoke the attorney-client privilege and other privileges (but not the fifth amendment, as explained below) during the proceeding. There are no rules on what objections, if any, are allowed or disallowed. They are also sworn testimony and can be used later at trial for impeachment.
Use and Derivative Use Immunity (in criminal prosecution)
While civil investigative demand hearings are strictly for civil law enforcement purposes, these cases frequently involve conduct that could violate criminal statutes that could trigger or involve parallel criminal proceedings by state criminal prosecutors or federal prosecutors. Many of the cases I brought involved actual or potential parallel criminal proceedings. Yet, the person providing testimony may not invoke the fifth amendment privilege against self-incrimination, because the CCPA expressly provides for use and derivative use immunity for this testimony, which means it is not admissible in a criminal trial. It is not clear—and has not been tested to my knowledge—whether this immunity provision attaches to federal prosecutions.
Section 6-1-111(1) provides:
Any testimony obtained by the attorney general or a district attorney pursuant to compulsory process under this article or any information derived directly or indirectly from such testimony shall not be admissible in evidence in any criminal prosecution against the person so compelled to testify. The provisions of this subsection (1) shall not be construed to prevent any law enforcement officer from independently producing or obtaining the same or similar facts, information, or evidence for use in any criminal prosecution.
Given the use and derivative use immunity under section 6-1-111(1) afforded to any person providing testimony during an investigative hearing, the person may not invoke the constitutional privilege against self-incrimination as grounds for refusing to testify. See, e.g., People ex rel. Smith v. Jordan, 689 P.2d 1172 (Colo. App. 1984); Duncan v. Norton, 974 F. Supp. 1328 (D. Colo. 1997).
This is an important feature of the Colorado civil investigative demand hearings. In contrast to an SEC investigative hearing where the witness may, and often does, invoke the fifth amendment privilege, in Colorado the AG has the ability to seek and receive answers to many questions that would not otherwise be answered in a federal investigative process.
While receiving a civil investigative demand hearing subpoena is daunting and there are no rules providing any guidance about the process, the witness or target is advised to have an experienced attorney who is familiar with the process and the written and unwritten rules of the process.
Federal Law Enforcement Agency Rules
Federal Law Enforcement Agencies with Civil Investigative Hearing Rules:
● Antitrust Division (U.S. Department of Justice)
Antitrust Civil Process Act, 15 U.S.C. § 1312 (Civil Investigative Demand)
Antitrust Division Manual (Fifth Edition, updated April 2015), Chap. 3, Investigation and Case Development
● Federal Trade Commission (FTC)
FTC Act, 15 U.S.C. § 57b-1 (Civil Investigative Demands)
16 CFR Part 2 (revised September 27, 2012), Nonadjudicative Procedures
● Consumer Financial Protection Bureau (CFPB)
Title X of the Dodd-Frank Act, 12 U.S.C. § 5562 (Investigations and Administrative Discovery)
12 CFR Part 1080 (adopted June 29, 2012), Rules Relating to Investigations
● U.S. Attorney General
False Claims Act, 31 U.S.C. § 3733 (Civil Investigative Demands)
●Securities and Exchange Commission (SEC)
17 CFR Part 203 (revised June 2008), Rules Relating to Investigations
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 brought by the Attorney General. He and his team conducted the most civil investigative demand hearings in the office.