Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Ill. App.: Illinois Attorney General’s investigative subpoena upheld, (Jan 13, 2015)

By Dan Selcke, J.D.

The Illinois Attorney General had authority to issue an investigative subpoena to a person suspected of violating the Illinois Consumer Fraud Act, according to an Illinois appellate court. The attorney general’s request to enjoin the defendant from engaging in trade or commerce within the state until he complied with the subpoena was upheld (Illinois v. DiCosola, January 9, 2015, Schostok, M).

Contested subpoena. Michele DiCosola, the defendant, sold instructional DVDs, held seminars, and provided one-on-one consultations regarding bankruptcy and foreclosure laws. The Illinois Attorney General became suspicious that he was violating the CFA by misrepresenting that his services could save a consumer’s home from foreclosure. Pursuant to that statute, the attorney general issued DiCosola an investigative subpoena, ordering him to appear for a meeting. However, DiCosola did not show up or try to reschedule. The attorney general brought suit, and the circuit court granted her summary judgment. DiCosola appealed.

Authority under the CFA. The appellate court began by considering whether the attorney general had acted within her authority in issuing DiCosola a subpoena. Section 3 of the CFA allowed the attorney general to investigate anyone she believed to be engaged in any practice that violated the statute. She also could investigate if she believed it was in the public interest to find out whether someone was engaged in such a practice. In this case, she had received information suggesting that DiCosola was violating the CFA, the Mortgage Rescue Fraud Act, and the Attorney Act. Thus, she was well within her rights to conduct an investigation.

Section 4 of the CFA allowed the Attorney General to issue subpoenas as a means of conducting those investigations, so she was also within her rights when she subpoenaed DiCosola. Finally, Section 6 allowed her to seek injunctive relief for failure to comply with a subpoena, and that relief was allowed to “restrain the sale or advertisement of any merchandise or the conduct of any trade or commerce.” 815 ILCS 505/6(a) (West 2010). Therefore, the Attorney General had the authority to issue the subpoena, and the circuit court was correct to enjoin DiCosola from engaging in trade or commerce until he complied with it.

Probable cause. DiCosola offered several arguments against the subpoena and the injunction, but the appellate court rejected all of them. To start, he argued that the Attorney General had not shown that her investigation was supported by probable cause. However, neither the Illinois nor the federal constitution required a probable cause showing for an administrative investigation. At this point, the Attorney General was merely looking into whether DiCosola had violated any laws, not into the nature of those violations.

Fourth Amendment. Next, the court shot down DiCosola’s argument that the subpoena violated the Fourth Amendment of the U.S. Constitution. The statute under which the subpoena was issued—the CFA—was constitutional, it authorized the Attorney General to take the actions she did, and DiCosola did not argue that the information it sought was unreasonable or irrelevant.

Fifth Amendment. The appellate court also rejected DiCosola’s argument that forcing him to appear at the meeting would violate his Fifth Amendment right never to be compelled to act as a witness against himself in a criminal case. DiCosola did indeed have that right, but refusing to come to the meeting was the wrong way to employ it. He should have shown up for the original meeting and then invoked his right against self-incrimination in response to questions. DiCosola also argued that forcing him to attend the meeting would violate his Fifth Amendment rights because he was the subject of a federal criminal indictment. However, there was no indication that the Attorney General was participating in any kind of criminal prosecution, so there was no reason he should not respond to her subpoena.

First Amendment. Lastly, DiCosola argued that the injunction barring him from participating in trade or commerce was overly broad and violated his First Amendment rights, as the content of his advertisements for his services was not false or misleading. This argument was premature. The injunction was only a means to get him to comply with the subpoena and had nothing to do with the underlying commercial speech. With all of his arguments out of the way, the appellate court affirmed the judgment of the circuit court.

The case number is: No. 2-14-0523

Cases: Advertising StateUnfairTradePractices IllinoisNews