A recent decision in Tennessee reaffirmed that attorney general’s civil investigative authority and upheld sanctions against a company who failed to produce the requested material.
In In re Investigation of Wall and Assocs. 2021 Tenn. App. LEXIS 449 (Tenn. Ct. App. Nov. 12. 2021), the defendant was a provider of taxpayer services. The Tennessee attorney general served defendant with a Request for Information (RFI) in September 2017. After several years of limited responses and court rulings ordering defendant to respond to the attorney general’s RFI, in September 2020, the trial court issued an order compelling compliance with its earlier orders, imposing a civil penalty of $1000 and assessing attorneys’ fees of $5000. Defendant appealed.
Defendant first argued that the attorney general “failed to provide a sufficient factual basis for its enormously expensive, disruptive, and disproportionate investigation.” To justify the RFI, the attorney general cited hundreds of complaints about potential unfair acts or practices by the defendant affecting consumers in Tennessee. The attorney general also cited information received from the Virginia attorney general’s office about that office’s investigation, which had revealed information about defendant’s business conduct in its Tennessee office. The court of appeals found that either of these sources of information, standing alone, would be sufficient to show the attorney general’s “reason to believe” that defendant was engaging in unfair acts and practices.
Defendant next argued that the attorney general was required to “identify the alleged violation.” The court held that the attorney general need not specify the violation in the RFI, because the information sought by the RFI is what will determine whether there is a violation. “The purpose of such an investigation . . . is to uncover matters previously unknown to the investigating body which may or may not provide grounds for further action. It cannot know in advance what its investigation may produce . . .” (quoting In re Law Sols. Chicago LLC, 629 S.W.3d 124, 2021 WL 223817 (Tenn. 2021).
The court reviewed each of the attorney general’s requests and concluded, “the AG’s requests are: (1) reasonably relevant to the subject matter of the investigation, i.e., unfair and deceptive acts or practices by [defendant]; and (2) not too indefinite, as they provide a “reasonably informative description” of what is required. [citations omitted] Furthermore, there is no evidence to show that compliance with the RFI would unduly burden [defendant].”