Legal Definitions - civil investigative demand

A Civil Investigative Demand (CID) is a formal request issued by a government agency, such as the U.S. Department of Justice or a state attorney general's office, to gather information during a civil investigation.

It allows the government to compel individuals or organizations to provide documents, data, or testimony under oath. CIDs are typically used to investigate potential violations of laws like antitrust regulations, consumer protection statutes, or fraud, and they can be issued before any lawsuit or formal charges are filed. The demand can be served on anyone believed to possess information relevant to the investigation, not just those who might eventually be named as defendants.

Here are some examples of how a Civil Investigative Demand might be used:

• Example 1: Antitrust Investigation in the Tech Sector

  Imagine the U.S. Department of Justice is investigating a proposed merger between two major technology companies that produce competing software. Regulators are concerned that combining these companies could significantly reduce competition in the market, leading to higher prices or fewer choices for consumers. To assess the potential impact, the DOJ might issue CIDs to several smaller software developers, industry analysts, and even large corporate customers of the merging companies.

  How this illustrates the term: The CID allows the government (DOJ) to compel these third parties, who are not directly involved in the merger but possess relevant market information, to provide documents, sales data, and expert opinions. This information helps the DOJ understand the competitive landscape and decide whether to challenge the merger, all before any formal legal action is initiated.

• Example 2: State Consumer Protection Against Deceptive Advertising

  A state Attorney General's office receives numerous complaints about a company selling "miracle" health supplements online, claiming they can cure serious diseases without scientific evidence. The Attorney General suspects the company is engaging in deceptive advertising and consumer fraud. To build a case, the office issues CIDs to the company's advertising agency, its payment processing provider, and former employees who might have knowledge of the product's efficacy claims or sales tactics.

  How this illustrates the term: Here, the state government uses CIDs to gather crucial evidence from various sources. The advertising agency might have records of the misleading claims, the payment processor could provide transaction data, and former employees might offer firsthand accounts of internal practices. This information helps the Attorney General determine if a lawsuit for consumer fraud is warranted, without having to file charges first.

• Example 3: Federal Investigation into Healthcare Fraud

  The Federal Trade Commission (FTC) is investigating a group of medical device manufacturers suspected of colluding to fix prices for essential hospital equipment. This alleged price-fixing could lead to inflated costs for hospitals and, ultimately, higher healthcare expenses for patients. To uncover evidence of this potential conspiracy, the FTC might issue CIDs to several large hospital systems that purchase these devices, as well as to distributors and other competing manufacturers in the market.

  How this illustrates the term: The FTC, a federal government agency, uses CIDs to obtain detailed purchasing records, communication logs, and pricing agreements from entities that are not necessarily the targets of the investigation but possess vital information. This allows the agency to gather comprehensive data on pricing trends and communications between manufacturers, helping them determine if illegal price-fixing has occurred before deciding whether to pursue a civil enforcement action.