Recently, Congress has initiated numerous high profile investigations involving corporate America. Accounting firms, health care providers, and financial services, tobacco and pharmaceutical companies have been subjects of bruising Congressional probes. While it may be tempting to dismiss these proceedings as political games or media stunts, they pose substantial legal and public relations challenges to entities and individuals under investigation. Hence, it is prudent for corporate management to understand the breadth of Congress's jurisdiction, the mechanisms it uses to investigate, the procedural nuances that exist, and the strategies companies must consider when responding to such probes.
I. Congress's Jurisdiction Is Expansive
Both houses of Congress have broad authority to conduct investigations. As the Supreme Court observed in Watkins v. United States , 354 U.S. 178, 187 (1957): "The power of the Congress to conduct investigations is inherent in the legislative process. That power is broad."
While a congressional investigation must bear some relationship to legislative action, the fact that an inquiry fails to result in any legislative action has no bearing on the underlying authority to investigate. As the Supreme Court observed in Eastland v. United States Servicemen's Fund, 421 U.S. 491, 509 (1975), the legitimacy of congressional inquiry is not defined by what it produces: "The very nature of the investigative function - like any research - is that it takes the searchers up some 'blind alleys' and into nonproductive enterprises. To be a valid legislative inquiry there need be no predictable end result."
While there are theoretical limits to congressional inquiries, they are extremely difficult to corral. Virtually any investigation can be linked to a possible legislative function. Thus, it is safe to assume that if Congress is investigating, the inquiry is lawful.
II. The Committees "Rule"
Congress has authority to issue subpoenas to compel both the production of documents and testimony from witnesses. The Supreme Court has repeatedly acknowledged that the issuance of subpoenas falls within the protections of the Speech and Debate clause and is a legitimate act of Congress. Eastland v. United States Servicemen's Fund, 421 U.S. 491, 505 (1975). The power to issue them vests in each house and is, in turn, delegated to all standing committees. While the Permanent Subcommittee on Investigations in the Senate and the Oversight and Investigations Subcommittee (of the Energy and Commerce Committee) in the House are perhaps the most visible congressional-investigative entities, many others also conduct investigations and use subpoenas.
Notwithstanding broad subpoena power, committees often prefer to issue investigatory letters requesting the production of documents. Committees are often more inclined to seek the voluntary submission of documents as opposed to compelling their production. The responsible staff members of committees are often willing to negotiate the scope and timing of the production. In certain cases, they may even permit the redaction of proprietary and other sensitive information.
Sometimes subpoenas are issued when a committee considers the recipient of an investigative letter as uncooperative or the committee views preliminary responses as less than candid. In certain investigations, a committee may simply prefer to conduct the entire investigation with subpoenas. Thus, with a mere stroke of the pen, a committee can compel the production of millions of documents by subpoena.
Recipients of subpoenas have limited recourse. While an appeal to the discretion of the committee chair is possible, such efforts are usually unsuccessful. Normal procedural challenges existing in civil or criminal arenas are inapplicable. Motions to quash subpoenas, for example, do not exist. In fact, to challenge an aspect of the subpoena, a party must refuse to honor the demands and thereby be subject to a contempt proceeding. At that stage, a court will review the matter. Here again, however, relief is unlikely. Assuming the committee that issued the subpoena followed all applicable rules and Congress was acting pursuant to a valid legislative purpose, a court cannot enjoin its issuance.
In addition to the unavailability of judicial relief, the contempt power enjoyed by Congress further enables it to demand and secure subpoena compliance. As the Supreme Court recognized centuries ago, the power to hold witnesses in contempt is inherent in the legislative authority granted to both the House and the Senate. Anderson v. Dunn, 19 U.S. (6 Wheat.) 204, 219-20 (1821). Both Houses can refer a contempt citation to a U.S. Attorney for criminal prosecution for failing to testify or produce documents . See 2 U.S.C. 192, 194. Additionally, the Senate can initiate civil contempt proceedings by applying to the federal district court in the District of Columbia for an order requiring compliance with a Senate subpoena. See 28 U.S.C. 1365. Under that statute, courts have little discretion: if the subpoena is relative to a legislative function and properly issued and the witness refuses to comply, the court may find the individual in contempt and impose sanctions designed "to compel obedience to the order of the court." 28 U.S.C. 1365(b).
Whether one voluntarily responds to a document request or is compelled through a subpoena, care must be taken to provide a complete and accurate production. The failure to do so may subject one to federal felony charges including obstructing congressional inquiry or investigation, 18 U.S.C. 1505, and making false or misleading statements to congressional investigators, 18 U.S.C. 1001.
Before hearings begin, certain committees may opt to conduct depositions. In such proceedings, lawyers may not be posing the questions. Additionally, counsel to witnesses have a limited role: they may counsel clients and object but not pose questions. Those objections, however, are often resolved by the Chair, who is not likely to be sympathetic to the deponent.
At the hearings, the rules of evidence do not apply. Much discretion lies in the hands of the Chair. "Discovery" is not provided in advance, and there are no formal guidelines governing the duration of the testimony and the extent of the questioning permitted. The provision of false testimony to Congress - in either a hearing or in a deposition - renders one subject to a perjury prosecution. See 18 U.S.C. 1621.
Perhaps most disturbing to practitioners entering the congressional investigative fray for the first time, a committee may maintain that the attorney-client and other bedrock privileges do not apply. This topic has been hotly debated for centuries. In Stewart v. Blaine, 8 D.C. (1 MacArth.) 453 (D.C. 1874), a plaintiff refused to reveal information to Congress that he considered confidential attorney-client information and was held in contempt. In upholding his conviction, a District of Columbia court recognized that Congress has the authority to overrule common law privileges. Id. ; but see United States v. Keeney, 111 F. Supp. 233, 234 (D.D.C. 1953), rev'd on other grounds, 218 F.2d 843 (D.C. Cir. 1954) (implying, in dicta, that the attorney-client privilege may apply in congressional probes). More recently, a Senate committee subpoenaed Provident Life and Accident Company in 1990 during a Medicare investigation. Given that a federal court had previously upheld the privileged nature of the documents sought by the committee, Provident sought to enjoin Congress from subpoenaing the records. The same court, however, ruled that its earlier decision concerning the privileged nature of such documents was not binding on the Congress of the United States. In re Provident Life & Accident Co., No. CIV-1-90-219 (E.D. Tenn. June 13, 1990).
While such areas are unsettled, the practical reality is that determinations about the applicability of such privileges will be made by the committees.
III. The Fifth Amendment May Be An Option
While congressional witnesses do not enjoy a startling number of procedural protections afforded in criminal and civil proceedings, constitutional rights, such as invocation of the Fifth Amendment, is an option for those compelled to testify. The privilege, however, is available to individuals - not entities - and is of limited utility to corporations. In fact, even a corporate officer must produce corporate documents that contain evidence that would incriminate him personally.
Nonetheless, perspective is necessary here also. While there is case law criticizing prosecutors' efforts to compel witnesses to testify in person solely for the purpose of emphasizing they exercised the Fifth Amendment before a jury, no such limitations exist in Congress. Thus, while counsel may attempt to advise a congressional committee in advance that a witness will invoke the Fifth Amendment and request that the witness not be required to personally appear to invoke the privilege, such requests are often rejected. From Congress's standpoint, requiring a witness to repeatedly and publicly invoke the Fifth Amendment may advance an investigation and actually lead a witness to withdraw that claim and furnish testimony instead. At the very least, so the thinking goes, others contemplating a similar approach may think twice.
Witnesses do have the right to request closed hearings. Both the Senate and the House rules permit closed executive sessions where warranted. In the Senate, closed executive sessions can occur where the testimony "will tend to charge an individual with crime or misconduct, to disgrace or injure the professional standing of an individual, or otherwise to expose an individual to public contempt or obloquy, or will represent a clearly unwarranted invasion of the privacy of an individual." Senate Rule XXVI(5)(b)(3). In the House, closed sessions may occur where the testimony, if taken in public, "may tend to defame, degrade or incriminate any person " House Rule XI 2.(k)(5). However, if the request for a closed session is denied, the witness cannot refuse to testify on that ground.
As in the criminal sphere, Congress may seek an immunity order compelling the testimony of witnesses who invoke the Fifth Amendment. Federal law specifically authorizes federal courts to issue immunity orders in appropriate cases, see 18 U.S.C. 6005, though only "use" and not "transactional" protection is afforded. Hence, a witness testifying under "use" immunity may be prosecuted for an offense about which she testifies, provided her testimony and nothing "derived from it" are used in the prosecution. See Kastigar v. United States, 406 U.S. 441 (1972). While the Attorney General of the United States cannot oppose an immunity request and cannot prevent the issuance of the order, he or she can request the delay of issuance of immunity up to twenty days from the initial request. 18 U.S.C. 6005(c). During that period, the Department of Justice may consider the impact immunity will have on its pending investigations and inform Congress about any such concerns. As a practical matter, however, the reversed convictions of Oliver North and John Poindexter, who had been granted immunity by Congress in the Iran-Contra matter, make it less likely that a congressional witness will be given immunity.
IV. Preparation Is Crucial To Responding To Congressional Probes
Given the absence of many procedural safeguards enjoyed in criminal and civil litigations, extensive work must be undertaken before submitting documents to Congress or providing testimony.
On the document end, efforts must be undertaken to negotiate the scope and timing of the production to, among other things, ensure that a thorough and accurate response is submitted. Efforts must also be undertaken to streamline production, safeguard proprietary and other confidential information and review all documents before submission are necessary. Carefully crafted cover letters accompanying the production of documents, which are numbered and redacted (if agreed beforehand) should occur.
Before testifying - at a deposition or before Congress - considerable time should be spent attempting to understand the nature of the questioning the witness will likely sustain. Careful review of all relevant documents is essential. As all witnesses are afforded an opportunity to make opening statements, the preparation of one should be considered.
V. Practical Considerations
A congressional investigation is not a trial. The audience is not a single judge or jury. And there is no final judgment at the conclusion of the proceeding. Counsel must be aware of the numerous audiences that will be observing his or her client.
The typical congressional investigation includes the investigative stage, hearings, a report (often with dissenting views) and legislative responses. Careful consideration must be given in determining the goal for each of these phases of the process.
Importantly, there are audiences beyond just Congress that must be considered in responding to an investigation. The media attention to hearings results in great public interest. Companies involved in congressional inquiries must be sensitive to the impact they will have on both consumers and shareholders.
In addition, civil lawsuits often follow on the heels of congressional investigations. Thus, counsel must consider the ramifications that positions taken and statements made before Congress will have in subsequent litigation.
Finally, criminal and regulatory investigations often accompany congressional investigations. These executive branch initiatives may run parallel to or commence following the legislative branch review. Regardless of the timing, those involved in congressional investigations should proceed with the assumption that their words, deeds, and documents will be dissected by Justice Department, S.E.C., and possibly other agency lawyers.
In short, congressional inquiries pose great risks for those under investigation. Accordingly, careful consideration and analysis should be given at every stage.
Stanley A. Twardy is a former U.S. Attorney for the District of Connecticut who was involved in numerous investigations as a staff member of the U.S. Senate. Michael G. Considine was a supervisory federal prosecutor in the Eastern District of New York. Both are members of the White Collar Defense and Internal Investigations Group at Day Pitney LLP.