A Newsletter from Shumaker, Loop & Kendrick, LLP Autumn 2015
4 Independent Contractors under the
New Labor Paradigm
8 Cuba Today
11 Preliminary Relief in Arbitration
®
12 It’s Time to Check Your Ticket for
2016 and Beyond
14 A Checklist for Employers
17 Regulation of Drones
19 Dawn of a new Statutory Scheme
to Protect Tenants
21 Documentation for an Investment Fund
25 Say it Ain’t So Bobby
What to Do When the
Government Comes Calling
I
n today’s complex world of e-commerce
and international competition, increasingly
governmental agencies (both state and
federal) are resorting to “dawn raids”
(i.e., unannounced service of search
warrants) on businesses to aid them in
their investigations. The tactic is becoming
more common and is typically used by the
FBI for investigation of antitrust violations,
securities fraud, cyber threats and a variety of other
crimes. Unfortunately, often “innocent” companies are
subjected to this method of investigation—even if they
are not the actual targets of the investigation. These raids
usually occur without warning around the opening of
business when a group of armed FBI
agents arrive with a search warrant
and demand all of the company’s
records, les, data, servers, cell
phones. Typically the agents also
request to “interview” ofcers
and employees. More and more
frequently, we are being asked by
our clients for advice on what to do
and what not to do if their company
is the subject of such a raid.
First of all, it helps to understand
how this process begins. Usually, as the result of a
complaint (which could come from a competitor, an
employee, a former employee, a vendor or a customer),
a company becomes either the target of an investigation
and is suspected of participation in an unlawful activity
or it is chosen as a potential witness. A secret grand jury
is convened by the government (unknown to anyone else)
and warrants are issued for the collection of company
records and “evidence.” Sometimes the agencies obtain
search warrants from courts as the result of secret wire
taps on employee phones (including cell phones) and
other information from informants—some who have
obtained immunity under amnesty provisions. Most
federal agencies (like the Department of Justice, the FTC,
SEC, EPA, etc.) use the FBI to conduct these early stage
investigations and to execute search warrants.
In order to enhance the ability to capture the best
evidence “by surprise,” the warrants are then served
by well-trained FBI agents familiar with both the
investigation and the law. The recipient of one of these
warrants is at an enormous disadvantage because
typically he or she is unprepared, confused, and
frightened. However, there are certain things that you
can do to prepare your company for this type of event
in a way that complies with the law yet enhances the
ability of your lawyers to successfully deal with the
investigation.
It is also important that you protect your employees
in this circumstance by making certain that they
know in advance what their rights are and what they
are required to do and what they do not have to do.
Advance planning is critical so that panic and bad
choices do not follow the arrival of the agents. It is
“too late” to start trying to protect your interests when
the investigators show up. Every company needs to
develop a “Search Warrant Action Plan” (“SWAP”)
as a part of its crisis or emergency response plan
so that everyone will know in advance what to do.
Accordingly, we recommend that you adopt a SWAP
www.slk-law.com
that includes the following protocols
and explanations and advise your
employees with respect to each—
before the government arrives.
1. First and foremost, if you do not
already have a crisis or emergency
response team and protocols,
develop them immediately. It
is critically important that your
employees avoid panic and keep
as calm and collected as possible
in these situations. The rst
person who will be confronted
by investigators will likely be a
receptionist or similar employee
who will be understandably
terried at the sight of a dozen
armed federal agents coming
through the door and demanding
records. The rst step to a good
plan is to develop a written
emergency response notication
list which includes the names, titles,
phone numbers (including cell
numbers), email and text addresses
for your immediate response
ofcers in your order of preference
for contact. Since your rst choice
on your list may not be available,
the receptionist (or other “greeter”)
should be trained to locate the
rst available name on this list.
If you have in-house counsel,
that person would likely be rst,
otherwise a high level ofcer who
is experienced and trained to deal
with this situation. You also need to
try to contact your outside counsel
immediately (if you do not have in
house counsel), but you likely will
need to respond before your outside
counsel can be located and present.
The agents will normally allow a
reasonable amount of time for a
responsible ofcer to arrive, but that
period of time is not great!
2. The SWAP ofcer (if not your
in-house lawyer) must then
contact legal counsel immediately.
Someone will need to verify the
validity of the search warrant and
verify its purpose and scope. The
ofcer should ask to see the agents’
credentials (to be certain that they
are who they say they are) and to
obtain a copy of the search warrant.
A search warrant authorizes the
agents to locate and seize (take) all
materials described in the warrant.
You may not refuse or resist. But,
you also do not have to provide
materials beyond what the warrant
specically dictates. Some are more
specic than others, but all warrants
will describe the type of materials to
be produced. The agents may look
in all les, ofces, drawers, safes,
cabinets that are likely to contain
or may possibly contain relevant
materials and you must provide
access to them to such places—even
if previously locked or secured. It
is important, however, that you
do not inadvertently expand the
scope of the warrant by trying to
“help” or by agreeing or consenting
to seemingly harmless requests to
look at other things. In order to
be valid, a search warrant must be
signed by a judge or magistrate
with jurisdiction over the premises
to be searched and it must state
“with particularity” the place to
be searched and the nature of the
materials to be seized. It must also
be executed within ten days of
issuance.
3. The SWAP ofcer should clearly
express to the agents that it is the
company policy to cooperate.
Cooperation is very important,
but “helping” the investigation is
not only unnecessary but also not
advised.
A search
warrant
authorizes the
agents to locate
and seize (take)
all materials
described in the
warrant.
3
4. The agents should be directed to
the precise location of the records
sought by the warrant. If you can
collect (assemble) these records
in one room that is suggested;
however, do not allow the agents
to “wander” away from the
appropriate ofces to look at other
areas, etc.
5. All employees need to be advised
(preferably in writing and before
any raid) about their rights in the
event of a raid. You may not at any
time tell employees that they cannot
or should not talk to investigators
(that is deemed to be obstruction of
justice), but you may tell them:
(a) They are not required to talk
to the agents or to answer any
questions.
(b) A statement (by the agents)
that there is presumption of
guilt on the part of anyone who
refuses to answer in question
is nonsense. Agents often tell
employees that “if you won’t talk
to us you must be guilty” as an
intimidation tactic which should
be anticipated and ignored.
(c) They are entitled to have their
own lawyer present before they
answer any questions. It is okay
if they want to use the company
lawyer for this purpose at this
stage of an investigation, but
because the company lawyer
may deem it to be a conict of
interest to represent company
employees under certain
circumstances, it is a good idea to
pre-select several local criminal
law attorneys and to have their
contact information available
to employees. Most criminal
lawyers are happy to be included
on such a list and it is okay for
the company to agree to pay their
fee at this juncture.
(d) Statements by agents that such
interviews are “off the record,”
offers of immunity or statements
to the effect that “you are not the
person who we are interested in
for this” are to be disregarded.
No statement to a government
ofcial is ever “off the record”
and investigative agents have
absolutely no authority or ability
to grant immunity to witnesses
or to give assurances that are
not or that they will not become
targets of the investigation.
(e) If they choose to answer
questions, however, they must
tell the truth. Often lying to
agents has a more serious
consequence than the crime that
is being investigated. Answers
should obviously be limited to
facts (not opinions) that they
actually, personally know to be
true.
6. Employees should be told that they
do not have to stay at work during
an investigation and may leave (or
go home) if they choose. If they
choose to leave, however, they
must leave behind any company
computers, or other company
devices or documents and les.
They may take strictly personal
items, however.
7. It is important to keep an accurate
log of everything that the agents
take. If you have the time and
ability to copy les (either
electronically or hard copy), do
so. You can demand a reasonable
amount of time to make copies of
what is being taken and it will be
of enormous value to your lawyers
going forward.
8. It should be discussed with the
agents that a procedure needs to be
agreed upon to protect potentially
privileged documents or material
and/or trade secrets and business
condential material.
9. Arrange for the search to be
videotaped if possible.
10. Request that the agents not attempt
to interview employees without
counsel present.
11. Send an email out to all employees
that advises of the search, expresses
the company policy to cooperate,
expresses the belief that the
company has not committed any
wrongful acts and that advises
employees to contact a SWAP team
member with any questions or
concerns.
The foregoing guidelines will apply
to the “dawn raid” situation where
agents arrive unexpectedly at the
company. The more common method
of investigation involves the service
upon the company of a subpoena,
civil investigative demand (“CID”)
or informal written or telephone
request for information and/or
documents. Obviously any such
requests should be forwarded to
counsel immediately for handling.
Because counsel will have some time
to respond to these types of requests,
your SWAP involvement will not
be necessary. It will be necessary,
however, in such event to suspend
your record retention program and
advise employees to not destroy
documents (including emails and
texts) as pertains to matters which
are the subject of the investigation.
For additional information, contact
Mike Briley at mbriley@slk-law.com
or 419.321.1325 (Toledo) or David
Axelrod at daxelrod@slk-law.com or
614.628.4427 (Columbus).
