DOJ and FTC update Second Request guidance to address the use of ephemeral messaging applications

The agencies’ updated guidance memorializes how the agencies have, in practice, already increased their demands and expectations regarding the retention and production of EMAs during the second request process.  Announcing the new guidance, FTC Bureau of Competition Director Henry Liu stressed that the legal responsibility that companies and individuals involved in government investigations have to preserve documents applies to “new methods of collaboration and information sharing tools, even including tools that allow for messages to disappear via ephemeral messaging capabilities.”  Manish Kumar, Deputy Assistant Attorney General of the DOJ Antitrust Division, warned against opposing counsel or their clients “feign[ing] ignorance” about their preservation and production responsibilities when they choose to conduct business using EMAs.  Kumar said that the agencies “expect that opposing counsel will preserve and produce any and all responsive documents, including data from ephemeral messaging applications designed to hide evidence.”  The FTC has previously warned that failure to produce responsive documents may result in either civil enforcement or a referral to criminal prosecutors via the Bureau of Competition Criminal Liaison Unit.3

New guidelines formalize recent FTC and DOJ Second Request production protocols   

The new guidelines formalize practices that the U.S. antitrust agencies have been actively employing in antitrust investigations over the last year.  Below we discuss some of what we have seen in practice with respect to the agencies’ evolving requirements for the preservation and production of material stored in EMAs and similar technology.  In addition, we provide practical takeaways for companies on how to instruct employees about the proper use of this technology to avoid being caught unprepared in the case of a potential antitrust investigation. 

Document retention policies should cover the treatment of ephemeral messaging communications

Companies that allow employees to use EMAs in the ordinary course of business—or do not explicitly prohibit their use—should maintain document retention policies that clearly state how the company intends to preserve the communications generated on these platforms.  If a company’s document retention policy authorizes employees to use EMAs, but during the course of an antitrust investigation the FTC or DOJ discovers that the company has deleted messages generated on the platform in violation of company policy or a legal hold notice, the company will face increased scrutiny regarding whether their document collection and preservation practices are sufficient.  In addition, companies should conduct regular and updated training sessions to (i) instruct employees about the appropriate use of EMAs, (ii) inform employees of how EMAs are retained by the company, and (iii) alert employees to the likelihood that any communications generated on EMAs will be discoverable in agency investigations and litigation.

Companies should double-down on efforts to discourage employees from using non-authorized EMA platforms on personal devices used for business purposes

Even if company policy specifically prohibits the use of EMAs—either through written policy or by blocking access on company devices— it is essential for leadership to understand the extent to which employees may be using EMAs on their personal devices for business purposes.  Failure to disclose the use of EMAs for relevant communications, even on personal devices, at the outset of an investigation can lead to heightened agency scrutiny once these forms of communications are inevitably discovered by enforcers.  A company’s loss of credibility early in an investigation will make it difficult for the company to negotiate out of increasingly burdensome production requirements, increasing costs and risks for the company.  In addition, it will be harder to regain the trust of the authorities after a breach of compliance obligation early in the process. 

If the use of personal devices for work is prohibited by company policy, the company should reiterate this message in regular training sessions and written policies distributed to employees.  If the use of personal devices is necessary for work, companies are strongly encouraged to instruct employees to limit use of these devices to authorized purposes, to vet all EMAs used on personal devices for work purposes, and to provide instruction for authorized use exceptions. 

In an investigation, if it is apparent that a document custodian has used their personal devices for business purposes, these devices are subject to discovery.  Each custodian in a second request or other compulsory legal process should be asked targeted questions about the extent of their use of personal devices for business purposes (including the use of EMAs on those devices), and advised of the potential consequences of untruthful responses.  Such consequences may include not only negative impacts on the employee’s relationship with the company, but also costly delays for the company in complying with the investigation.  A company that maintains a clear and straightforward policy that establishes guidelines for employees’ use of personal devices and EMAs for business purposes and enumerates consequences for violations will be well-positioned to respond to agency investigations. 

Authored by Chuck Loughlin, Ashley Howlett, Danny Mader, Soyoun Yasuda, and Jill Ottenberg.

References

1 Federal Trade Commission press release, “FTC and DOJ Update Guidance That Reinforces Parties’ Preservation Obligations for Collaboration Tools and Ephemeral Messaging” (Jan. 26, 2024) available here.

2 Federal Trade Commission, Slack, Google Chats, and other Collaborative Messaging Platforms Have Always Been and Will Continue to be Subject to Document Requests (Jan. 26, 2024) available here.

3 Federal Trade Commission, “BC’s Criminal Liaison Unit is Off to the Races” (March 24, 2023) available here.