Dealers may not be familiar with the term “compulsory process” but a dealership’s general office probably sees forms of it from time to time.

We’re referring to legally enforceable demands, subpoenas and employee garnishments.

Dealers should be concerned when served with subpoenas seeking records of customers and employees or with garnishments demanding that employee wages be withheld. 

Clearly, you want to make sure the orders are properly handled to protect against potential liability. A manager should be charged with ensuring compliance. The compulsory process document should be logged in and reviewed.

The first question to ask is whether it is legally binding. Responding to a subpoena that is not enforceable could be a basis for a claim by an employee or customer that the dealer improperly breached its obligations to protect non-public personal information.

Dealers know the potential fallout of improperly withholding money from an employee. Any questions should be directed to knowledgeable legal counsel. If the compulsory process must be answered, the response should be delegated to a responsible employee. The manager should follow up until the dealership has complied with its obligations.

However, a proper response is not the only area of concern. A dealer should carefully track all received compulsory processes. A pattern of them may tell you of a situation in the dealership that requires attention. Here are some examples of that:

  • An occasional subpoena from law enforcement for deal records is not unusual.  However, if the dealership is receiving subpoenas seeking multiple deal records, you may want to investigate.
  • For instance, in money-laundering investigations, law enforcement officers question drug dealers and other felons about what they do with their cash. Authorities almost always ask where the felons buy their cars. A series of subpoenas seeking deal records may indicate investigators are looking at the dealership’s sales activities. It may indicate an employee is acting improperly.
  • Law enforcement subpoenas for employee records may indicate that law enforcement is looking at dealership employees for potential wrongdoing.  Wrongdoers in the dealership don’t usually focus their attention solely on victims outside the dealership. You will definitely want to find out why employees are subjects of interest.
  • Identity theft is the most commonly committed financial crime today. A series of subpoenas or other forms of compulsory process seeking information concerning ID theft victims could indicate a problem in the dealership. 
  • There may be employees operating or cooperating with an ID theft ring.  There simply may be employees who are not careful with dealership records. These potential problems are a serious concern for the dealership.
  • Sometimes employees have disputes with creditors. An isolated garnishment probably is not something to worry about. However, if the dealership gets a series of garnishments for an employee, especially someone such as a cashier or parts-department employee who has access to valuables, you will want to give the situation some attention.
  • If you receive subpoenas or civil investigative demands for a wide range of information about the policies or practices of the dealership, you definitely should consult with knowledgeable counsel.
  • In such cases, the dealership itself probably is the subject of interest. Discuss with your lawyer whether the compulsory process is proper and whether you should file an appropriate challenge to some or all of the demands. Explore whether your lawyer should discuss cooperation with the investigation and raise the issue of seeking a resolution.

Michael Charapp is a lawyer who represents auto dealers. Based in McLean, VA, he is at 703- 564-0220 and mike.charapp@cwattorneys.com.