UNITED STATES OF AMERICA
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UNITED STATES OF AMERICA
BEFORE THE FEDERAL TRADE COMMISSION
COMMISSIONERS:
Lina M. Khan, Chair
Noah Joshua Phillips
Rebecca Kelly Slaughter
Christine S. Wilson
Alvaro Martín Bedoya
In the Matter of
CIVIL INVESTIGATIVE DEMANDS
DATED JUNE 30, 2022, TO AMAZON.COM, INC.
AND CERTAIN CURRENT AND FORMER AMAZON
EMPLOYEES
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File No. 212 3050
ORDER GRANTING IN PART AND DENYING IN PART
OMNIBUS PETITION TO LIMIT OR QUASH
CIVIL INVESTIGATIVE DEMANDS
By WILSON, Commissioner:
Amazon.com, Inc. (“Amazon”), on behalf of itself and 17 individuals 1, has submitted an
Omnibus Petition to Limit or Quash (“Petition”) a series of Civil Investigative Demands
(“CIDs”) issued by the Commission on June 30, 2022, in connection with an investigation into
whether Amazon has engaged in unfair or deceptive acts or practices in its use of recurring or
negative option subscriptions to Amazon Prime and other Amazon services. 2
Amazon raises multiple grounds on which it claims the CIDs directed to the company and
the individual witnesses should be limited or quashed. These claims include that investigating
FTC staff interfered with the witnesses’ selection of counsel during investigational hearings; the
CID to the company is unduly burdensome and vague; the schedule for testimony from
1
The individuals petitioning to quash are Jeffrey Bezos, Christopher (“C.R.”) Brown,
Sharon Chiarella, Dave Clark, Nahshon Davidai, Jamil Ghani, Russ Grandinetti, Greg Greeley,
Doug Herrington, Benjamin Hills, Sridhar Iyer, Andrew Jassy, Neil Lindsay, Dharmesh Mehta,
Katey Muus, Cem Sibay, and Gloria Smuda.
2
The CIDs at issue specifically provide that the FTC is investigating whether the conduct
in question violates Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, Section 4 of
the Restore Online Shoppers’ Confidence Act (“ROSCA”), 15 U.S.C. § 8403, Section 907(a) of
the Electronic Funds Transfer Act (“EFTA”), 15 U.S.C. § 1693e(a), and Section 1005.10(b) of
Regulation E, 12 C.F.R. §1005.10(b). See also Resolution Directing Use of Compulsory Process
in a Non-Public Investigation of Unauthorized Charges to Consumers’ Accounts, File No. 082
3247 (Oct. 22, 2018).
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individual witnesses is unduly burdensome; and CIDs issued to Jeffrey Bezos and Andrew Jassy
should be quashed as unduly burdensome given their positions with the company.
As set forth further below, we clarify the Commission’s position on the rights of
witnesses in investigational hearings. We do not accept that Amazon has sufficiently established
as a general matter that the CIDs issued to the company or to individual witnesses present undue
burdens in terms of scope or timing and we decline to limit the CID on these grounds. We do
find, however, that certain “catch-all” provisions are not sufficiently particular under the
Commission’s Rules of Practice and we modify these. Moreover, consistent with Amazon’s
representations regarding issues in scheduling investigational hearings, we have set forth a
protocol for efficiently establishing dates for future hearings. Accordingly, we grant the petition
in part and deny it in part and order Amazon to comply consistent with the terms of the Order
provided below.
I.
Background.
A.
The investigation’s initial phase.
Amazon is one of the world’s foremost companies. According to some authorities,
Amazon is the sixth largest company in the world as well as the largest retailer. See, e.g., Lauren
Debter, The World’s Largest Retailers 2022: Pandemic Helps Amazon Cement Its Lead, Forbes,
(May 12, 2022), https://www.forbes.com/sites/laurendebter/2022/05/12/worlds-largest-retailers2022-amazon-walmart-alibaba/?sh=7ac78a4859e3. As of December 2021, the company reported
employing over 1.6 million people and receiving net revenue of over $32 billion dollars. 3
Amazon.com, Inc., Annual Report (Form 10-K), at 4, 38 (Feb. 3, 2022).
In March 2021, the Commission initiated an investigation into whether Amazon had
engaged in violations of the FTC Act or the Restore Online Shoppers’ Confidence Act
(“ROSCA”) in connection with its Amazon Prime subscription offering. Specifically, the
Commission wanted to know whether Amazon violated these statutes “by automatically
enrolling consumers without their prior express informed consent or failing to provide a simple
mechanism for a consumer to stop recurring charges.” Civil Investigative Demand Issued to
Amazon.com, Inc., Matter No. 2123050, at 2 (Mar. 16, 2021) (“March 2021 CID”).
According to Amazon, it sufficiently complied with this CID and ultimately produced a
total of more than 37,000 pages of documents to the investigating FTC staff, along with
interrogatory responses and additional information in the form of meetings and other followups. 4 Petition, at 2. As Amazon describes it, by February 2022, staff had “inexplicably
disengaged” only to “abruptly” reemerge in April 2022 with a new leading attorney and a
broader and “accelerated” investigation. Id., at 2-3.
3
By contrast, the FTC’s 2021 budget topped out at only $351 million, or slightly more
than 1% of Amazon’s earnings. See Budget and Strategy, FED. TRADE COMM’N,
https://www.ftc.gov/about-ftc/budget-strategy.
4
We understand that Amazon has not produced significantly more information since its
responses to the March 2021 CID.
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B.
The March 14, 2022, Business Insider article.
On March 14, 2022, the website Business Insider published an article titled, “Internal
documents show Amazon has for years knowingly tricked people into signing up for Prime
subscriptions.” 5 The article’s subtitle quoted a former Amazon employee as stating, “We have
been deliberately confusing.”
Relying on statements from current and former employees, as well as internal emails and
documents, the article reported that, since 2017, Amazon itself had been concerned that its use of
website design decisions may have led customers to feel as though the company manipulated
them into signing up for Amazon Prime. Insider article, at 1. The article reported that “[i]n
several cases, fixes for these issues were proposed and considered, but resulted in lower
subscription growth when tested, and were shelved by executives.” Id., at 1.
For example, in 2017, an Amazon customer who was not a Prime member and who
sought to purchase merchandise would see in the course of the check-out process a sign-up
screen that offered two choices to click: a button labeled “Get fast, free shipping” or button
labeled “No thanks, I do not want fast, free shipping.” By clicking “Get fast, free shipping” the
consumer would be automatically enrolled in a trial period for Amazon Prime. Id., at 3. As the
Insider article reported, prompts such as these led to “confusion and dissatisfaction” among
consumers. Id. Indeed, according to the Insider article, one data point from August 2017
indicated that 17,131 of the 25,542 cancellation requests handled by the Prime team were related
to such “accidental sign-ups.” Id., at 4.
Importantly, the article described how Amazon undertook a years-long “testing” process
to measure the impact of different website design language approaches, or “prompts,” and to
clarify the sign-up process. 6 Id., at 2-3. But the article also reported this process had not resolved
all of the issues in the sign-up process. Id., at 3. Moreover, the article also suggested that
Amazon has identified similar issues relating to sign-up language for other subscription services,
including Prime Video, Kindle Unlimited, and Amazon Music. Id., at 2.
In addition to disclosing the issue relating to Amazon’s awareness of potentially
confusing or deceptive language with respect to sign-up processes, the Insider article also
5
Eugene Kim, “Internal documents show Amazon has for years knowingly tricked people
into signing up for Prime subscriptions. 'We have been deliberately confusing,' former employee
says[,]” Business Insider (Mar. 14, 2022), https://www.businessinsider.com/amazon-prime-ftcprobe-customer-complaints-sign-ups-internal-documents-2022-3 (“Insider article”).
6
Among other approaches, in 2021, this testing process also included preparing a mock
draft with “high-clarity” proposed language that included not only Prime but Amazon Music and
Kindle Unlimited. Insider article, at 6. In 2021, Amazon conducted a study titled “Digital
Subscriptions Workflow Consistency” that was intended to bring a more consistent look and
procedure across Amazon’s subscription services while also achieving clarity for consumers. The
study noted that consumers were surprised and “displeased” by the existing workflow that
allowed for automatic sign-ups without an additional confirmation. Id., at 6-7.
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addressed a concern regarding cancellation processes. As the article related, internal documents
indicated that Amazon “intentionally drew out the process of canceling a Prime membership.”
Id., at 6. Under a project bearing the evocative title of “Iliad” – the classical epic describing the
ten-year siege of the city of Troy– “Amazon created multiple layers of questions and new offers
before a Prime member could cancel their subscription, in the hopes of reducing member churn.”
Id. As with sign-ups, Amazon also received from Project Iliad data allowing definable and
measurable results for Amazon. As one document reported, following the development of Project
Iliad, “retention appears to be trending positively” as the number of cancellations dropped by
14% and fewer members navigated to the final cancellation page. Id.
C.
The Commission’s Response and the June 2022 CIDs.
On April 19, 2022, staff issued a letter to Amazon regarding its productions of
information in response to the March 2021 CID. This letter reminded Amazon to sign its
responses to interrogatory questions in the CID under oath. The letter also directed Amazon to
run additional search terms and to do so across a broader range of custodians. Finally, the letter
identified certain deficiencies or areas for supplementation in Amazon’s interrogatory responses
and requested that Amazon supplement these responses with additional information and
document productions. See Letter from Jonathan Cohen, Counsel for the Federal Trade
Commission, to Laura Kim, Counsel for Amazon (Apr. 19, 2022).
On June 30, 2022, the Commission issued the CIDs at issue in the instant petition, which
consist of one CID to the company seeking testimony from one or more corporate representatives
on four identified topics, answers to nine interrogatories, and productions in response to three
requests for documents, plus seventeen CIDs to current and former Amazon employees for
testimony. The subject matter of the June 2022 CID to Amazon sweeps more broadly across
Amazon’s services than the March 2021 CID and clearly responds to the Insider article. 7 See
Civil Investigative Demand issued to Amazon.com, Inc., Matter No. 2123050 (June 30, 2022)
(“June 2022 CID”). For instance, in the March 2021 CID, the subject of the investigation is
defined as “Amazon Prime” but, consistent with the disclosures in the Insider article regarding
potentially deceptive conduct in other subscription programs, the June 2022 CID defines the
subject of the investigation more generally to include Amazon’s “Negative Option” programs. 8
Compare March 2021 CID, at 2 with June 2022 CID, at 2. The June 2022 CID also includes
7
The June 2022 CID is also broader than the March 2021 CID because the June 2022 CID
incorporates the earlier CID and April 2022 letter by reference. The June 2022, CID includes a
defined term “Outstanding Discovery” that encompassed these earlier requests. See June 2022
CID, Definition D-21: “Outstanding Discovery” means: “(a) requests made pursuant to the
March 16, 2021, CID to Amazon.com, Inc. (including the requests made therein, and through
subsequent the FTC’s April 19, 2022, correspondence to Amazon’s counsel); and (b) the
interrogatories and document requests herein.” (Bold in original.)
8
See June 2022 CID, Definition D-20: “D-20. “Negative Option” means in “an offer or
agreement to sell or provide any goods or services, a provision under which the consumer’s
silence or failure to take an affirmative action to reject goods or services or to cancel the
agreement is interpreted by the seller as acceptance of the offer.” (Bold in original.)
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specifications seeking testimony, interrogatory responses, and documents relating to the Insider
article. June 2022 CID, at 2, 3, 4.
D.
The July 2022 Modification Letter.
Following additional meet-and-confers, on July 22, 2022, staff modified and narrowed
the June 2022 CID. See Letter from Jonathan Cohen, Counsel to the Federal Trade Commission,
to Laura Kim and John Graubert, Counsel for Amazon (July 22, 2022) (“July 2022 Letter”).
Among other modifications, staff extended the deadline for Amazon’s compliance to August 5,
2022, extended the deadline by which Amazon or certain individual witnesses could file petitions
to limit or quash their CIDs and altered certain interrogatories and definitions. Id., at 1-2.
As particularly relevant here, the letter modified the topics for testimony by a corporate
representative of Amazon. The letter replaced the four testimonial specifications in the June 2022
CID with three main topics that staff expected to address over three consecutive days of
testimony: the Prime enrollment process, the Prime cancellation process, and “All issues other
than Prime enrollment and cancellation.” Id., at 2. The letter then provided an expanded and
detailed list of specific subtopics for testimony within each of these three main topics. Id., at 2-5.
Examples of these subtopics include “Testing, studies, and surveys” relating to both Prime
enrollment and Prime cancellation, see id., at 3, 4, and “Material changes to the flow that
Amazon implemented or considered” relating to both Prime enrollment and cancellation. See id.,
at 3, 4. In addition, for each main topic and day of testimony, staff included a “catch-all”
subtopic that allowed staff to seek testimony on
Any additional topic or topics covered by the [June 2022 CID], which require no
more than two hours of testimony during the day, and that we identify with
reasonable particularity two weeks before this portion of the examination.
Id., at 3, 4, 5.
E.
Witness representation during investigational hearings.
Also in July 2022, a new issue developed with respect to Amazon’s counsel Covington &
Burling (“Covington”) and investigational hearings. According to Amazon, starting with
communications on July 7 and 11, 2022, the investigating FTC staff took issue with the fact that
Covington represented both Amazon the corporation and individual employees of Amazon.
Petition, at 13. Amazon states that staff premised this objection on the Commission’s Rule of
Practice 2.7(f)(3), which limits attendance at investigational hearings to certain specified
individuals, including counsel for the person being examined. 16 C.F.R. § 2.7(f)(3); see also
Petition, at 13. According to Amazon, staff stated that an attorney engaged in joint representation
of other parties could not qualify as counsel for the person being examined, even if the witness
identified that lawyer as his counsel and expressed a desire for the attorney to be present. Id.
Amazon further states that the company and staff had multiple discussions in-person, by
letter, and by email, during which staff changed its positions. Id., at 13-14. According to
Amazon, after conceding that joint representation was permissible, staff then asked Covington
lawyers representing both the company and individual witnesses to sign nondisclosure
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agreements prohibiting discussion of testimony from individual hearings with other witnesses, a
request Covington declined. Id., at 14-15. Amazon alleges that staff then required Covington to
agree as a condition of attendance “that its appearance and involvement in the investigational
hearing is limited to its representation of the witness and the witness’ interests.” Id., at 15.
Amazon states that staff informed Covington that if it did not so agree, Covington lawyers would
be asked to leave the hearing room and if they refused, would be removed for trespassing on
government property. Id.
These discussions “came to a head” during an investigational hearing on August 4.
Amazon states that as the hearing commenced, investigating staff asked Covington to commit to
limiting its representation. Id., at 11, 15. When Covington’s lawyers refused to do so, Amazon
alleges that staff demanded counsel leave the room, which they did. The witness also departed,
and the hearing concluded shortly after. Id., at 15.
F.
The instant petition.
Amazon filed the instant petition the next day. The petition raises a bundle of claims
arising from the June 2022 CIDs to the company and individual witnesses and staff’s conduct of
the investigation, including allegations that:
•
•
•
•
Staff has employed a novel interpretation of Rule 2.7(f)(3) that improperly interferes with
witnesses’ selection of counsel. Petition, at 13-16.
The June 2022 CID is unduly burdensome and overly broad. Id., at 16-23.
o Amazon points to the expansion of the investigation into additional subscription
programs as evidence the CID is “unreasonable.” Id., at 17.
o Amazon also takes issue with certain CID definitions that it claims are subjective
and argumentative. Id., at 17-18
o Amazon argues that the specified topics for testimony from the entity are
insufficiently specific. Id., at 18-20. In particular, Amazon cites to the catch-all
language described above as not providing Amazon sufficient notice to effectively
prepare. Amazon also asserts that some of the identified topics – such as “testing,
studies, and surveys” or “material changes” – are overly broad and insufficiently
defined.
Investigating staff has insisted on an unreasonable and unduly burdensome schedule for
testimony from individual witnesses. Id., at 23-25.
Individual CIDs for testimony to Jeffrey Bezos and Andrew Jassy are unduly burdensome
and unnecessarily cumulative. Id., at 25-26. Amazon argues these CIDs should be
quashed in their entirety or postponed to the end of the testimonial period, subject to a
showing by staff that Mr. Bezos and Mr. Jassy have unique knowledge that staff has been
unable to obtain from other witnesses despite reasonable efforts.
The petition attached two exhibits. The first is a declaration from John Graubert, one of
Covington’s counsel representing Amazon, attesting to the events at the investigational hearing
on August 4. Petition, Ex. 1. The second is a declaration from Mark England, Senior Corporate
Counsel for Amazon, attesting to the burden imposed on Amazon from having to respond to the
June 2022 CID. Petition, Ex. 2.
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For relief, Amazon asks the Commission to quash staff’s interpretation of Rule 2.7(f)(3)
and the witness’s right to counsel in investigational hearings. Amazon also asks that the
Commission quash or limit the June 2022 CID with respect to the scope and definitions of the
investigational hearing topics and with respect to the CID’s expansion into additional
subscription programs. At a minimum, Amazon asks the Commission to grant it until September
15, 2022, to respond to the CID. On behalf of the individual witnesses, Amazon argues the
Commission should quash their CIDs and establish a reasonable schedule for testimony. Finally,
with respect to those CIDs issued to Messrs. Bezos and Jassy, Amazon asks they be quashed or
delayed and limited based on a showing of need by staff. Petition, at 5, 28.
We address each of Amazon’s arguments below.
II.
Analysis.
A.
The Witness in an Investigational Hearing is Entitled to Counsel of
their Choice, Who Should Limit Their Involvement To That
Representation.
Amazon begins its petition by arguing that the FTC’s investigating staff has improperly
interfered with the witnesses’ selection of counsel in connection with the individual CIDs.
Petition, at 13. Specifically, Amazon claims that staff’s interpretation of Rule 2.7(f)(3) giving
“staff the authority to decide on its own that an attorney representing other parties in the
investigation (including the corporate respondent) does not qualify as ‘counsel for the person
being examined’” is incorrect and, if ratified, would amount to a major change in representation
before the FTC and other administrative agencies. Id.
The Commission’s authority regarding the rights of witnesses in investigational hearings
is expressed both in the statute authorizing the Commission to issue CIDs, see 15 U.S.C. § 57b1(c)(14), and in the Commission’s Rules of Practice at Rules 2.7 and 2.9. Commission Rule
2.7(f)(3) states:
For investigational hearings conducted pursuant to a CID for the giving of oral testimony,
the hearing official shall exclude from the hearing room all persons other than the person
being examined, counsel for the person being examined, Commission staff, and any
stenographer or other person recording such testimony.
16 C.F.R. § 2.7(f)(3). In turn, rule 2.9 states:
Any witness compelled to appear in person in a deposition or investigational hearing may
be accompanied, represented, and advised by counsel[.]
16 C.F.R. § 2.9(b).
The Commission’s authority flows from two separate sources. First, the Administrative
Procedure Act (“APA”) guarantees witnesses a right to representation in investigational
hearings: “A person compelled to appear in person before an agency or representative thereof is
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entitled to be accompanied, represented, and advised by counsel or, if permitted by the agency,
by other qualified representative.” 5 U.S.C. § 555(b). Courts have followed the APA by enabling
and supporting witnesses’ selection of counsel, even where that counsel may be jointly
representing other clients or witnesses. See, e.g., SEC v. Csapo, 533 F.2d 7, 11-12 (D.C. Cir.
1976); Backer v. Commissioner, 275 F.2d 141, 144 (5th Cir. 1960). Consistent with these
principles, the Commission’s statute and rules plainly provide a right to “be accompanied,
represented, and advised by counsel.”
To be sure, the ability of a witness to select counsel for purposes of an investigational
hearing is not unlimited. One potential limitation arises from the Rules of Professional Conflict
and an attorney’s ethical duty to avoid undisclosed conflicts of interest. Should such a conflict
arise among an attorney’s clients, that attorney must either disclose and seek the consent of the
clients or withdraw from the representation. 9 See, e.g., D.C. R. Prof. Conduct 1.7, 1.13. 10
Second, the FTC’s investigating staff has the ability to control attendance at
investigational hearings in order to prevent delay or disruption and to promote reliable
factfinding. The Commission’s authority to issue CIDs is based on similar authority provided by
Congress to the Department of Justice’s Antitrust Division in the Antitrust Civil Process Act, 15
U.S.C. § 1311. See FEDERAL TRADE COMMISSION ACT OF 1979, S. REP. NO. 96-500, at 23 (Dec.
14, 1979) (directly citing 15 U.S.C. § 1311 and stating, “The scope of the commission's CID is to
be the same as under the Antitrust Civil Process Act and is modeled after the criteria and
procedures used by the Department of Justice in issuing a CID.”).
As the legislative history to the Antitrust Civil Process Act evinces, Congress was
concerned with protecting the integrity of investigational hearings and witness testimony from
undue interference by parties, an outcome Congress avoided by allowing DOJ – and later the
FTC – to limit attendance at investigational hearings. See ANTITRUST CIVIL PROCESS ACT
AMENDMENTS OF 1976, H. R. REP. NO. 94-1343 at 12-13 (July 15, 1976) (stating that allowing
parties to participate in hearings within nonparty witnesses would, among other things,
“hopelessly compromise[]” the “confidentiality of the investigation,” and expose witnesses “to
economic retaliation from the targets of the investigation.”); see also 15 U.S.C. § 57b1(c)(14)(B)(“Any Commission investigator before whom oral testimony is to be taken shall
exclude from the place where the testimony is to be taken all other persons except the person
giving the testimony, his attorney, the officer before whom the testimony is to be taken, and any
stenographer taking such testimony.”).
Absent evidence of an undisclosed and unconsented conflict of interest between or
among Covington’s corporate and individual clients, our rules require that a witness’s selection
of counsel should be given deference, even if that counsel jointly represents another entity in the
9
See Guillen v. City of Chicago, 956 F. Supp. 1416, 1426 (N.D. Ill. 1997) (“We hold that
City counsel can continue its representation of the paramedics, but with one caveat: City counsel
must fully inform its clients of the pros and cons of joint representation.”).
10
There is presently no evidence before the Commission suggesting that Covington faces a
potential conflict of interest between Amazon and any of the individual Amazon employees
providing testimony.
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investigation. Any counsel selected by a witness for an investigational hearing must limit
participation to those activities necessary for representation of the witness being examined,
consistent with counsel’s obligations under applicable rules of professional conduct. Of note, it
would be inappropriate for counsel representing a witness to lodge objections on behalf of
another party’s or witness’s interests, with one exception. The rules of professional conduct
require both the questioning attorney and defending attorney to prevent the witness from
intruding upon a third party’s privilege. See D.C. R. Prof. Conduct 4.4, cmt. [1] (“Responsibility
to a client requires a lawyer to subordinate the interests of others to those of the client, but that
responsibility does not imply that a lawyer may disregard the rights of third persons. It is
impractical to catalogue all such rights, but they include legal restrictions on methods of
obtaining evidence from third persons and unwarranted intrusions into privileged relationships,
such as the client-lawyer relationship.”). It is consistent with the FTC’s rules that a witness may
be instructed not to answer any question that may intrude upon a third party’s privilege. 16
C.F.R. § 2.9(b)(2) (“Counsel may instruct a witness not to answer only when necessary to
preserve a claim of protected status.”).
If counsel for the witness at an investigational hearing violates any of the Commission’s
rules – for example, by engaging in argumentative or speaking objections, instructing the witness
to refuse to answer on grounds other than protected status, or purporting to object on behalf of a
third party at the deposition – the Commission’s rules provide the hearing official authority to
address this conduct. See 16 C.F.R. § 2.9(b) (referencing 16 C.F.R. § 4.1(e)). 11 We admonish
counsel for individual witnesses to adhere scrupulously to the limitations described in this
section.
B.
Amazon has not sufficiently established its challenges to the scope of
the June 2022 CID.
Amazon next raises several challenges to the scope and specifications of the June
2022 CID. Amazon asserts that some of the requests and specifications are unduly
burdensome and overly broad, while others are vague or insufficiently specific. We
address these in turn.
1.
Amazon has not established that the CID’s document requests and
interrogatories are unduly burdensome.
Amazon raises a general challenge to the scope of the June 2022 CID and its document
requests and interrogatories. Specifically, Amazon claims that the expansion of the scope of the
investigation to include additional subscription services is unreasonable and unduly burdensome
and will require interviewing entirely different teams of professionals and reviewing entirely
different documents and data sets for each of the services. Petition, at 17. As Amazon argues,
this expansion of the CID’s scope makes it “unworkable” for Amazon to comply by the modified
deadline of August 5. Id.
11
In addition to these provisions, staff may also seek judicial enforcement of the rules and
regulations governing compulsory process. See, e.g., In re Oral Testimony of a Witness
Subpoenaed Pursuant to Civil Investigative Demand No. 98-19, 182 F.R.D. 196 (E.D. Va. 1998)
(enforcing CID issued pursuant to False Claims Act to bar attendance of party counsel).
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In support, Amazon proffers a declaration from Mark England, a Senior Corporate
Counsel at Amazon. Petition, Ex. 2. Mr. England states that in order to respond to the June 2022
CID, Amazon will need to consult with numerous individuals from various internal groups.
Petition, Ex. 2, ¶ 7. These groups will “likely” include individuals from 21 different internal
units he identified. Id. Mr. England added that, “while it is difficult to predict the precise number
of hours it would take to comply with the June 30, 2022, CID,” Amazon’s projection of the
burden is shaped by the effort it supplied to respond to the March 2021 CID. Id., ¶ 8. For that
CID, Mr. England stated that Amazon reviewed “hundreds of thousands of pages” of documents
and consulted with “dozens” of “extremely busy individuals with substantial normal job
responsibilities,” some multiple times. Id., ¶¶ 9-10. As he describes, the scope of the CID is
“complicated” because it adds new subscription programs and because the “catch-all” provisions
for testimony are “vague [and] yet-to-be-determined.” Id., ¶ 11. As he stated, “For each program,
Amazon would need to compile information on and educate witnesses about a vast number of
many different issues spanning multiple years.” Id., ¶ 12. Mr. England did not specify, however,
an estimate of the cost of the effort required to comply with the March 2021 CID; nor did he
quantify the level of effort in terms of dollar cost or manhours required to contact and interview
each of these witnesses. Mr. England ultimately concluded that responding to the June 2022 CID
would “require substantial time and resources” but he did not describe any further impact on the
company. Id. Instead, he declared that compliance with the June 2022 CID by the August 5,
2022, deadline would be “impracticable.” Id., ¶ 13.
With respect to the expanded scope of the June 2022 CID, Amazon cites no authority
supporting the proposition that the FTC may not alter the scope of an investigation in mid-course
in response to the information it receives, and we are aware of none. Indeed, in this case, the
expanded scope of staff’s investigation is particularly warranted based on the Insider article’s
descriptions of how Amazon employed potentially deceptive processes in subscription services
other than Prime, including Amazon Music and Kindle Unlimited. To accept Amazon’s
argument that staff may not expand an investigation when alerted to broader concerns would
prevent agencies from following the facts as they come to light, thus impeding their
effectiveness. 12
More generally, the fact that a CID may be broad does not by itself render a CID invalid.
FTC v. Texaco, Inc., 555 F.2d 862, 882 & n.51 (D.C. Cir. 1977) (en banc) (citing Adams v. FTC,
296 F.2d 861, 867 (8th Cir. 1961)). The expanded scope of the June 2022 CID – at least with
respect to the March 2021 CID – is no basis by itself for the Commission to limit or quash it.
Nor is a CID unreasonably broad where the breadth of the inquiry is in large part
attributable to the magnitude of the subject’s business operations. Texaco, 555 F.2d at 882. It
12
To the contrary, courts have concluded that the FTC should be accorded “extreme
breadth” in conducting its investigations. “Even if one were to regard the request for information
in this case as caused by nothing more than official curiosity, nevertheless law-enforcing
agencies have a legitimate right to satisfy themselves that corporate behavior is consistent with
the law and the public interest.” Genuine Parts Co. v. FTC, 445 F.2d 1382, 1391 (5th Cir. 1971)
(citing United States v. Morton Salt Co., 338 U.S. 632, 652 (1950)).
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may be that the expanded scope of the June 2022 CID requires Amazon to consult many more
offices and employees than it did in responding to the March 2021 CID, but this is a result of the
scope of the operations related to the alleged practices at issue.
Relatedly, Amazon also protests the compliance obligation imposed by the CID,
repeatedly describing it as “unduly burdensome.” Petition, at 11, 16, 18. But compulsory process
does not become unduly burdensome and thus subject to limitation unless compliance “threatens
to unduly disrupt or seriously hinder normal operations” of the recipient’s business. Texaco, 555
F.2d at 882. Indeed, “[s]ome burden on subpoenaed parties is to be expected and is necessary in
furtherance of the agency’s legitimate inquiry and the public interest[,]” id., and courts accept
that “[t]ime must be taken from normal activities and resources must be committed to gathering
the information necessary to comply. Nevertheless, the presumption is that compliance should be
enforced to further the agency's legitimate inquiry into matters of public interest.” FTC v.
Shaffner, 626 F.2d 32, 38 (7th Cir. 1980). Accordingly, the test for undue burden “is not easily
met.” Texaco, 555 F.2d at 882.; see also EEOC v. Maryland Cup Corp., 785 F.2d 471, 477 (4th
Cir. 1986).
The responsibility for demonstrating undue burden falls on the party claiming it and must
be established with more than conclusory or unsupported statements. FTC v. Standard American,
Inc., 306 F.2d 231, 235 (3d Cir. 1962) (appellants have the burden to show unreasonableness of
the Commission’s demand and make a record to show the “measure of their grievance rather
than [asking the court] to assume it.”) (citing Oklahoma Press Publ’g Co. v. Walling, 327 U.S.
186, 217-18 (1946); Morton Salt, 338 U.S.at 654); see also FTC v. Jim Walter Corp., 651 F.2d
251, 258 (5th Cir. 1981) (“The subpoenaed party may not merely utter the claim; it must
persuade us.”).
Amazon has not met its burden. The arguments of counsel and the supporting declaration
from Mr. England provide no specific or quantifiable information whatsoever about the burden
imposed by the June 2022 CID. Even when attempting to draw a comparison to the effort it made
in responding to March 2021 CID, the company still fails to provide any specific information
about what that earlier compliance involved in terms of time or expense. In short, Amazon has
done little more than assert that the June 2022 CID presents the type of burden expected from
any form of compulsory process, without establishing that this burden has become undue.
More to the point, even if Amazon had provided more specific information about the
expected cost or effort of complying with the June 2022 CID, the proper comparison is not to the
March 2021 CID but rather to Amazon’s “normal business operations” as a whole. Maryland
Cup Corp., 785 F.2d at 477; see also Texaco, 555 F.2d at 882. To establish a claim of undue
burden, Amazon would have to show that compliance costs would unduly disrupt or seriously
hinder its normal business operations. Texaco, 555 F.2d at 882. This Amazon has not done, or
even attempted to do. 13 Instead, Amazon offers only the tepid assertion that compliance will be
“impracticable.” Petition, Ex. 2, ¶ 13.
13
For a company the size and magnitude of Amazon, demonstrating that compliance with
the FTC’s CID would impact its normal business operations might be difficult. See, e.g., FTC v.
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In addition to a general challenge to the scope of the June 2022 CID, Amazon also raises
two specific claims of burden. First, Amazon objects to Interrogatory 1’s request for Amazon to
identify the number of consumers who became “Nonconsensual Enrollees” and “Diverted
Cancels,” observing that these terms were not included in the March 2021 CID and arguing that
the terms require a subjective analysis of consumer intent and are also “argumentative.” For
these reasons, Amazon asserts they present an undue burden, particularly in light of the expanded
scope of the investigation. Petition, at 17-18.
Amazon’s challenges to these terms cannot be sustained. Amazon has not shown how
complying with these terms would detrimentally affect its normal business operations, or
provided any support for its argument that the scope of the investigation could not permissibly be
expanded to include these terms. Finally, as the Insider article shows, these concepts are not
subjective, but rather are categories of customers familiar to Amazon from its ongoing processes
of studying and testing nonconsensual enrollment and developing the “Iliad” program for the
apparent – and successful – purpose of diverting consumers who wished to cancel their
subscriptions. Indeed, the Insider article cites data suggesting that Amazon has these numbers
readily available. Insider Article, at 4 (17,131 of 25,542 cancellations resulted from “accidental
sign-ups”) and 6 (cancellations dropped by 14%). Having employed these concepts for years in
its regular course of business, we see no credible reason why Amazon cannot employ them for
the FTC on behalf of the public interest.
Second, Amazon claims that interrogatory 8 of the CID – which asks for ephemeral
messages and an ephemeral messaging log from certain covered executives – presents a burden
because many of the messages cannot be recovered, consulting with each executive is timeconsuming, and compliance creates a risk of disclosing purely private information. 14 Petition, at
18.
Here again, Amazon fails to substantiate the alleged burden with anything other than the
most general and abstract terms. Standard American, Inc., 306 F.2d at 235 (appellants have the
burden to show unreasonableness of the Commission’s demand and make a record to show the
“measure of their grievance rather than [asking the court] to assume it.”). To the extent relevant
ephemeral messages or related information are no longer within Amazon’s possession, custody,
and control, Amazon of course has no obligation to produce them. Williams v. UnitedHealth
Grp., No. 2:18-CV-2096, 2020 WL 528604, at *2 (D. Kan. Feb. 3, 2020) (denying motion to
compel ephemeral instant messages because they were not stored and “[a]ll responsive
Dresser Industries, Inc., Misc. No. 77-44, 1977-1 Trade Cases ¶ 61,400 (D.D.C. Apr. 26, 1977)
(“It may very well be that Dresser’s burden is greater than that of the other subpoeneaed
companies, but that is to be expected from the fact that Dresser is the dominant firm in the
industry with by far the largest volume of sales.”).
14
Ephemeral messages are “secure written communications between one or more parties
that are generally considered dynamic, nonstatic, and ‘lasting a very short time.’” The Sedona
Conference, Commentary on Ephemeral Messaging, 22 SEDONA CONF. J. 435, 446 (2021)
(footnotes omitted). Ephemeral messages are typically exchanged through specific messaging
apps intended for this purpose.
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documents that exist have been produced”). But to the extent Amazon or its employees have
generated or retained records or information responsive to this interrogatory – including personal
knowledge of such messages – they must produce those records and/or related information as
directed. Maryland Cup Corp., 785 F.2d at 479 (explaining that “all relevant information within
the company’s control is subject to the [agency’s] subpoena power,” including information that
“exists in the minds of the supervisors and workers,” and that the company must “seek[] out that
information”).
2.
Staff’s “catch-all” requests for testimony are not sufficiently
particular in the context of this case.
Amazon next argues that the CID’s requests for testimony from the corporation, as
modified by the July 2022 Letter, are not “reasonably particular” in the way required by Rule
2.7(h), 16 C.F.R. § 2.7(h). Amazon specifically points to staff’s inclusion of “catch-all”
provisions allowing staff to identify additional topics for testimony within the scope of the June
2022 CID with two weeks’ notice and upon the condition that such testimony on such late-added
topics may not exceed two hours. See Petition, at 18-19, 21; see also July 2022 Letter, at 3, 4, 5.
We agree that a CID’s specifications should be “sufficiently definite to provide guidance
as to what is to be produced by standards or criteria that make clear the duty of the person
subpoenaed.” Resolution Trust Corp. v. Greif, 906 F. Supp. 1446, 1452 & n.2 (D. Kan. 1995)
(citing In re Grand Jury Proceedings, 601 F.2d 162 (5th Cir.1979)). And while reasonable
particularity does not require “painstaking specificity,” Putco, Inc. v. Carjamz Com Inc., No. 20cv-50109, 2021 WL 492902, *2 (N.D. Ill. Feb. 10, 2021); see also Greif, 906 F. Supp. at 1452,
the Commission must still provide sufficient information for a CID recipient to evaluate the
request, prepare sufficiently, or otherwise seek an administrative remedy.
We do not believe that the “catch-all” requests as written here allow for those outcomes.
Courts have also disallowed the use of “catch-all” provisions on procedural grounds. See, e.g.,
Woods v. Standard Fire Ins. Co., No. 5:18-CV-658-JMH-MAS, 2022 WL 677567, at *8 (E.D.
Ky. Mar. 7, 2022). Accordingly, we limit the July 2022 modification to the CID to exclude those
catchall requests. Of course, staff retains the authority to further modify, clarify, or narrow the
existing topics identified in the June 2022 CID, including by identifying particular subtopics for
examination. 15
3.
Amazon’s other challenges to testimonial specifications cannot be
sustained.
Amazon has not succeeded in proving its claim that several of the topics identified are
overly broad. For instance, Amazon points to the inclusion of the modifiers “any,” “all,” and
“every” on certain topics to argue these topics are not reasonably particular. Petition, at 19. It
also asserts that topics such as “[t]esting, studies, and surveys” and “[m]aterial changes” to its
15
Staff may also hold open investigational hearings and recall witnesses for further
testimony to discuss written materials or documents produced by Amazon after the date of the
testimony.
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enrollment and cancellation processes are vague and not sufficiently specific, especially in view
of the breadth of Amazon’s operations. 16 Id., at 19-20.
A review of the July 2022 Letter shows the term “any” is only used with specific requests
intended to explore Amazon’s compliance with the Commission’s investigation, e.g.:
Any topic addressed in an unsworn or uncertified written discovery response
Any July 1 interrogatory not fully and timely answered in writing
July 2022 Letter. These topics are plainly limited in subject and they may be further limited by
Amazon’s own actions to swear or certify its discovery responses and answer interrogatories.
Similarly, the only request involving the “every” modifier is also reasonably specific because it
is tied to the Insider article:
Identify every action of any sort that the Amazon Parties took, in whole or in part, in
response to the Insider Article[.] 17
As for “[t]esting, studies, and surveys” or “[m]aterial changes” to its enrollment and
cancellation processes, we find these are sufficiently particular in light of the information
available to Amazon, including the overarching context of the Insider article, the Commission’s
authorizing resolution, the June 2022 CID’s description of the subject of the investigation, the
CID’s effective date ranges, and the July 2022 Letter. 18 Amazon’s suggestion that it has
conducted “hundreds” of tests does not mean the topic is insufficiently specific; a topic can
involve a large volume of material and still be reasonably particular. Cf. MasterMine Software,
Inc. v. Microsoft Corp., No. 13-cv-971, 2015 WL 12778417 at *6 (D. Minn. Aug. 5, 2015)
(“While preparing to testify fully on Deposition Topic No. 6 may have involved reviewing a
large volume of information, that does not mean that the topic was not described with reasonable
particularity.”).
16
We have not identified a testimonial specification using the modifier “all.”
17
The July 2022 Letter states that certain interrogatories will also serve as identified topics
for testimony. This specific topic is interrogatory B.9. in the June 2022 CID. See July 2022
Letter, at 3. Other interrogatories similarly incorporated into testimony ask for information about
“every Covered Executive” but we do not understand Amazon to object to these topics on this
ground.
18
The term “material” is readily defined and commonly understood. Material, BLACK’S
LAW DICTIONARY (6th ed. 1990) (“material” means “important”); see also Thomas v. Chicago
Park Dist., 227 F.3d 921, 925 (7th Cir. 2000) (rejecting First Amendment challenge based on the
theory “that the word ‘material’ is excessively vague” and characterizing that position as
“frivolous” given that “[t]he word is one of the elemental legal terms”), aff’d, 534 U.S. 316
(2002).
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C.
Amazon has not sufficiently supported its challenges to the CIDs for
testimony from individual witnesses.
1.
Amazon has not established that the schedule for testimony from
witnesses other than Jeffrey Bezos and Andrew Jassy presents an
undue burden.
Turning to the CIDs issued to individual witnesses, Amazon raises a general claim that
staff imposed an unreasonable burden by requiring that all of these hearings be completed before
September 20, an accelerated schedule that, according to Amazon, did not allow sufficient time
to prepare. Petition, at 23-25. For example, Amazon claims that in some cases, an individual’s
investigational hearing was scheduled only five days after counsel received notice. Id., at 24.
Amazon therefore asks for the schedule to be extended to allow the hearings to be completed no
later than October 21, 2022. Id., at 25.
To facilitate effective preparation of the witnesses, we will grant this portion of the
petition and extend the deadlines for responses, and in Section III we provide guidelines to
enable staff and counsel for Amazon and the witnesses to develop a hearing schedule that
ensures staff can obtain the information it needs within an expeditious but reasonable time frame.
2.
Amazon has not supported limiting or quashing the CIDs issued to
Messrs. Bezos and Jassy.
Finally, Amazon argues that undue burdens are presented by CIDs for testimony issued to
Mr. Bezos, Amazon’s Executive Chairman and former CEO, and Mr. Jassy, Amazon’s current
President and CEO. Petition, at 25. In support, Amazon cites cases applying the “apex doctrine,”
a concept developed under the Federal Rules of Civil Procedure to limit depositions of highranking officers and executives based on concerns that such depositions are burdensome, are
cumulative or duplicative of testimony from other witnesses, or are unnecessary because they
call for detailed, first-hand knowledge these officers may lack. Id., at 25-26 (citing United States
ex rel. Galmines v. Novartis Pharms. Corp., No. 06-3213, 2015 WL 4973626, at *1 (E.D. Pa.
Aug. 20, 2015); Celerity, Inc. v. Ultra Clean Holding, Inc., No. C 05–4374 MMC, 2007 WL
205067, at *3 (N.D. Cal. Jan. 25, 2007)). 19 Based on the “apex doctrine,” Amazon requests that
these CIDs be quashed. In the alternative, Amazon asks that these hearings be postponed until
after all other hearings, and that the testimony be limited to those subjects that staff can show
19
Amazon also cites Amazon.com, Inc. v. Comm'r, 108 T.C.M. (CCH) 588 (T.C. 2014). In
that case involving tax deficiency claims against the company, the court applied logic similar to
the “apex doctrine” to quash a trial subpoena issued to Mr. Bezos as cumulative and
burdensome. As discussed above, the “apex doctrine” and this case are not controlling where the
FTC is seeking information about Mr. Bezos’ knowledge of and authority over the practices at
the center of the investigation. Nor is a trial court’s disposition of a trial subpoena in a different
matter binding in this administrative investigation.
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they have been unable to obtain from other witnesses despite their reasonable efforts. 20 Petition,
at 26.
We do not find the “apex doctrine” applicable to this case. The “apex doctrine” arises out
of the Federal Rules of Civil Procedure, which employ a narrower scope of discovery than that
available to the Commission in administrative investigations. Compare Fed. R. Civ. P. 26(b)(1)
(allowing discovery of “any nonprivileged matter that is relevant to any party's claim or defense
and proportional to the needs of the case”) with Morton Salt Co., 338 U.S. at 652 (1950)
(enforcing process provided that “the inquiry is within the authority of the agency, the demand is
not too indefinite and the information sought is reasonably relevant”); see also FTC v. Invention
Submission Corp., 965 F.2d 1086, 1090 (D.C. Cir. 1992) (“The standard for judging relevancy in
an investigatory proceeding is more relaxed than in an adjudicatory one.”); In the Matters of
Civil Investigative Demand to Johnson & Johnson Dated August 19, 2019, and Subpoena Duces
Tecum to Johnson & Johnson Dated August 19, 2019, FTC File No. 191-0152, 2019 FTC LEXIS
95, at *7-8 (Oct. 18, 2019) (noting that the standard for relevance is “broader and more relaxed”
than would be in an adjudicatory discovery demand). The “apex doctrine” is not applicable
where the FTC seeks information from executives about knowledge of and authority over
practices at the center of the investigation. See FTC v. Bisaro, 757 F. Supp. 2d 1, 9 (D.D.C.
2010); In re Bridgestone/Firestone, Inc., Tires Prod. Liab. Litig., 205 F.R.D. 535, 536 (S.D. Ind.
2002).
For similar reasons, Amazon’s proposed alternative procedure is not acceptable. Amazon
provides no reason why the Commission must accept anything less than all the relevant
testimony it can obtain from these two witnesses. Moreover, the suggestion that the staff must
first show a reasonable basis for an investigation or otherwise seek approval to proceed with an
investigation has been soundly rejected by the courts. See New Orleans Public Service Co. v.
Brown, 507 F.2d 160, 164 (5th Cir 1975) (“The argument that the Commission, in its
investigation, must not ask any questions to which it does not already know the answers, has
about it the aura of another, and bygone, legal era.”) (cleaned up); see also FTC v. Church &
Dwight Co., Inc. 747 F. Supp. 2d 3, 9 (D.D.C. 2010) (rejecting claim that “FTC [must show] like
any litigant, that the documents demanded will lead to reasonably relevant and ultimately
admissible evidence” as mischaracterizing the nature of the FTC’s investigatory authority).
III.
Conclusion.
For the foregoing reasons, Amazon.com, Inc.’s petition to quash is granted in part and
denied in part.
IT IS HEREBY ORDERED THAT Amazon.com, Inc.’s Omnibus Petition to Quash
June 30, 2022, Civil Investigative Demands be, and hereby is, GRANTED in part and
DENIED in part.
20
Although Amazon cites the “apex doctrine,” Amazon does not independently quantify or
support the potential burden imposed by requiring Messrs. Bezos and Jassy to testify. Had
Amazon done so, the Commission and its staff could have evaluated that claimed burden to
determine if any requested modification was reasonable and warranted. See 16 C.F.R. § 2.4.
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IT IS FURTHER ORDERED THAT, to the extent provisions in the CID have not been
limited or quashed, these provisions remain valid and enforceable.
IT IS FURTHER ORDERED THAT, pursuant to Commission Rules of Practice
2.7(f)(3) and 2.9, 16 C.F.R. §§ 2.7(f)(3), 2.9, a witness in an investigational hearing is entitled to
be accompanied by counsel, even if that counsel jointly represents other parties or witnesses,
provided that selected counsel is not subject an undisclosed and unconsented conflict of interest,
and that selected counsel limits participation in such hearings to the representation of the witness
and fulfilment of ethical obligations with respect to attorney-client privilege.
IT IS FURTHER ORDERED THAT Amazon.com, Inc. shall comply in full with the
Commission’s June 30, 2022, Civil Investigative Demand no later than October 7, 2022, or at
such later date, time, and location as Commission staff may determine. Such compliance will
include provision of all required certificates pursuant to 15 U.S.C. § 57b-1(c) by October 7,
2022, or at later date, time, and location as Commission staff may determine.
IT IS FURTHER ORDERED THAT Amazon.com, Inc. and all individual Petitioners
receiving CIDs seeking testimony shall comply and provide the specified testimony, except as
otherwise limited by this opinion, on or before January 20, 2023.
IT IS FURTHER ORDERED THAT all investigational hearings pursuant to CIDs in
this matter will take place in either Washington, D.C., or Seattle, WA, unless the witness resides
in a different city, in which case the investigational hearing will occur at a location within 100
miles of the witness’s residence or may be conducted virtually, at staff’s discretion.
IT IS FURTHER ORDERED THAT Commission staff and counsel for Amazon.com
also representing individual Petitioners receiving CIDs for testimony will follow this process in
developing a schedule to complete all testimony by January 20, 2023:
(a) within two business days of this Order, Commission staff will propose two dates for
each witness, each in a separate week, including start times and locations;
and
(b) within four business days of this Order, each Petitioner will select from those options;
(c) if any Petitioner fails to make a selection, Commission staff may assign a date for
testimony and notify the Petitioner accordingly.
By the Commission, Commissioner Phillips recused.
SEAL:
ISSUED: September 21, 2022
April J. Tabor
Secretary
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.