Asserting Privilege to Block FTC Interview Questions

When a company finds itself under investigation by the Federal Trade Commission (FTC), one of the most important privileges it can assert is attorney-client privilege[1]. This allows a company to protect confidential communications between its attorneys and employees from being disclosed. However, the rules around asserting privilege in an FTC investigation can be complex. Here is an overview of some key issues companies should understand when asserting privilege to block FTC interview questions:

The FTC’s Investigative Powers

The FTC has broad investigative powers to issue Civil Investigative Demands (CIDs) to obtain testimony and documents[2]. This allows the FTC to ask wide-ranging questions and make broad document requests during an investigation. Companies seeking to limit the scope of an FTC investigation often try to assert attorney-client privilege or work product protections to avoid disclosing sensitive information.

How the FTC Can Challenge Privilege Claims

The FTC will often push back on broad privilege claims. The FTC can file a petition asking a federal court to compel a company to provide testimony or documents[3]. The court will then review privilege claims on a question-by-question or document-by-document basis. This means companies need to be prepared to defend each specific privilege claim.

The FTC bears the burden of proof in showing that a privilege claim does not apply[3]. However, courts will scrutinize privilege claims carefully, so companies need to assert privilege thoughtfully. Overly broad or vague claims are unlikely to withstand a court challenge.

Avoiding Subject Matter Waiver

One risk when asserting privilege is subject matter waiver. This means that voluntarily disclosing some privileged communications on a subject to the FTC could waive privilege for other communications on the same subject[5].

Companies need to be very careful to avoid subject matter waiver. Courts will look at fairness factors to decide if waiver applies[5]. Disclosing “core” privileged information but withholding related material may lead to waiver. Having clear policies and protocols for asserting privilege can help avoid inadvertent waiver.

Crime-Fraud Exception

Even if attorney-client privilege technically applies, the FTC can argue that the crime-fraud exception negates privilege claims[6]. This exception applies when attorney-client communications further future wrongdoing. Courts have found the crime-fraud exception can apply in FTC investigations involving serious allegations like fraud[6].

Joint Defense Agreements

Companies in the same industry sometimes enter joint defense agreements when facing an FTC investigation. This allows them to share privileged information without waiving privilege. However, courts scrutinize these arrangements and require stringent confidentiality protections[6]. All parties must share a common legal interest for the privilege to apply.

Avoiding Waiver in Merger Reviews

The FTC and state attorneys general often cooperate closely on merger investigations[4]. Companies need to be very careful about privilege waiver when providing merger information to multiple agencies. Entering into confidentiality agreements and limiting disclosures can help avoid privilege pitfalls.

Best Practices for Asserting Privilege

Here are some best practices companies should follow when asserting privilege in an FTC investigation:

• Avoid overly broad privilege claims – be specific on what is privileged and why
• Follow clear protocols for asserting privilege consistently
• Be very careful when disclosing some privileged material – watch out for subject matter waiver
• Scrutinize joint defense agreements to avoid inadvertent waiver
• Get legal advice when providing merger information to multiple agencies
• Document privilege claims thoroughly in case of a court challenge

Conclusion

Asserting privilege in an FTC investigation can be complex, but is an important tool for companies to protect sensitive information. Following best practices around privilege can help companies limit the scope of an FTC investigation while avoiding pitfalls like subject matter waiver. Companies facing an FTC probe should involve experienced legal counsel early on to plan their privilege strategy.

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