Legal Precedents on Using Deception in Your Investigations
By Isaac Peck, Editor
Pretexting, dishonesty, and/or using deception regarding who you are and what you are actually interested in, is an issue that is regularly litigated and also frequently discussed in the private investigator community–almost to the point of overkill. Is it legal? Is it unethical? Is it a good way to get yourself arrested or your lawyer’s case thrown out?
The answer: it depends.
Deception and pretexting are a gray area to the point that lawyers and private investigators themselves will often shy away from giving a direct answer. Practices can also vary widely by state–with states having different laws regarding misrepresentation, dishonesty, and pretexting specifically.
To compound matters, there are a variety of legal precedents where pretexting has been allowed or disallowed by courts–depending on the circumstances.
This article explores some of the most frequently cited landmark court cases where private investigators used deception and pretexting, and the court agreed with their methods.
Trademark Disputes and Unlawful Behavior
Looking at the various court decisions over the last twenty years, pretexting and deception have been successfully deployed, and have generally been warmly received by courts. Including when they’ve deployed in trademark, counterfeiting, and other legal cases where the “target” is engaging in unlawful behavior such as theft, fraud, or disregarding a previously issued court order.
For example, in the widely-cited case of Apple Corps Ltd. v. International Collectors Soc., the plaintiff hired private investigators to pose as customers in order to determine if the defendant’s complied with a previously issued court mandated Consent Order. Spoiler alert: the defendant did not.
In addressing the defendant’s arguments that the plaintif’s private investigators used “misrepresentation, intimidation and unethical conduct” the court distinctly noted that: “Undercover agents in criminal cases and discrimination testers in civil cases, acting under the direction of lawyers, customarily dissemble as to their identities or purposes to gather evidence of wrongdoing. This conduct has not been condemned on ethical grounds by courts, ethics committees or grievance committees.”
The Court submitted the evidence gathered by private investigators, adding that the prevailing understanding in the legal profession is “a public or private lawyer’s use of an undercover investigator to detect ongoing violations of the law is not ethically proscribed, especially where it would be difficult to discover the violations by other means.”
The case of Gidatex, S.r.L. v. Campaniello Imports, Ltd. is another widely cited legal precedent wherein private investigators posed as interior designers and spoke to the defendant’s sales staff on numerous occasions, recording several conversations.
Defendant’s put forward two key arguments. First, New York attorney code of conduct prohibits a lawyer from “circumvent[ing] a disciplinary rule through actions of another” and “engag[ing] in conduct involving dishonesty, fraud, deceit or misrepresentation.” In other words, the attorney’s use of private investigators to pretext is a clear violation of New York rules. Second, although it is not illegal in New York to record a conversation with someone without their consent, New York rules provide that “there is authority for the proposition that it is unethical for an attorney to do so, since such conduct is considered to involve deceit or misrepresentation.”
However, the court set these rules aside in this case, writing that “these ethical rules should not govern situations where a party is legitimately investigating potential unfair business practices by use of an undercover posing as a member of the general public engaging in ordinary business transactions with the target. To prevent this use of investigators might permit targets to freely engage in unfair business practices which are harmful to both trademark owners and consumers in general. Furthermore, excluding evidence obtained by such investigators would not promote the purpose of the rule, namely preservation of the attorney/client privilege.”
Statements They Otherwise Wouldn’t Have Made
Lastly, the defendant claimed that the plaintif’s (Gidatex) investigators used their “superior legal knowledge to trick and manipulate” defendants’ sales clerks into making the statements they made.
In response to this assertion, the court noted that the presence of investigators posing as interior decorators “did not cause the sales clerks to make any statements they otherwise would not have made. There is no evidence to indicate that the sales clerks were tricked or duped by the investigators’ simple questions such as ‘is the quality the same?’ or ‘so there is no place to get their furniture?’”
This is an important distinction that courts regularly point out. If you compare this to the recent case of Meyer v. Uber and Travis Kalanick, the court harshly rejected the private investigator’s use of pretexting, calling it illegal and clear misrepresentation, in part because the investigators tricked their subjects into revealing information that they otherwise would not have (See Uber Caught Using Unlicensed PIs). This defense is generally thrown out when private investigators pretend to be customers (even if those customers are interior designers), as it is easier to claim they were just pretending to be regular consumers and/or members of the public.
Additionally, in contrast to the two cases discussed above, Uber was also not specifically seeking to uncover illegal activity or unfair trade practices–but was instead engaging in a general “fishing expedition” — hoping to find information that could be used to smear or gain leverage on the plaintiff.
Counterfeit Software and PI Entrapment?
As we’ve seen, pretexting wherein private investigators have pretended to be customers or general members of the public in trademark and counterfeiting cases, is a common occurrence and is usually considered an acceptable practice in the court.
What about if a private investigator proposes a joint “illegal” venture with the “target”? That’s exactly what happened in the case of Adobe Sys. Inc. v. SKH Sys., Inc., which presents a uniquely interesting example of what some courts are willing to allow. This case was litigated in Texas.
Chorng “Jack” Hwang, owner of SKH, was in the business of selling used computers, laptops and hard drives preloaded with software. Learning that Hwang was altering and selling unlicensed Adobe software to a variety of small businesses, the plaintiff (Adobe) hired private investigator, Paul Brick, to approach Hwang and gather evidence.
Brick subsequently called Hwang and indicated that he had a variety of clients who needed Adobe related software products. Hwang was clear that what he was offering was unlicensed software, telling Brick: “when I sell stuff like that . . . you’re not buying a license. You’re buying an activator” and insisting that any customers must be told that they are getting unlicensed software.
Brick went on to propose a (illegal) relationship, where he would develop connections with companies seeking to buy computers loaded with software and Hwang would work in a customer service capacity.
Brick then met Hwang at a coffee shop where Hwang “sold, installed, and activated a series of unlicensed software on Mr. Brick’s laptop computer for $290.” Brick again proposed a business partnership where he would furnish the laptops and customers, then Hwang would install and activate unlicensed software, answer customer service questions, and keep the software running. Hwang agreed.
After receiving Brick’s intel, Adobe subsequently filed suit against Hwang and his company alleging trademark infringement, counterfeiting, unfair competition, and copyright infringement, among other things. Less than a week after filing its suit, Brick followed up with Hwang asking if he could “do another machine,” and Hwang accepted.
At trial, Hwang did not dispute any of the claims that Adobe made, instead his entire defense rested on attacking validity and admissibility of the evidence from Brick’s investigation–seeking to get the evidence thrown out of court.
Hwang’s argument was essentially Brick entrapped him by proposing “a large-scale business venture” and such conduct “contradicts traditional notions of justice and fairness” and is outside the range of conduct “deemed acceptable by other courts for pretext investigations.”
The Court was not persuaded, finding Hwang was already operating a large-scale business venture selling hundreds of computers loaded with Plaintiffs’ software before Brick ever approached him. The plaintiff cited nearly a dozen court cases where pretexting and undercover operations were used to gather evidence, noting that courts “have frequently admitted evidence, including secretly recorded conversations by investigators posing as consumers in trademark disputes.”
Adobe won summary judgement as well as its attorney’s fees.
The legal precedents make it clear that pretexting, undercover operations, and deception are widely used and even accepted by the courts in specific circumstances. As we’ve seen, these tactics are particularly popular in cases involving trademark and counterfeit disputes.
It is also important to note that laws about what is permissible vary by state.
Additionally, to stay on the safe side, there are some practices that should be universally avoided:
1. Pretexting to obtain phone records is illegal under federal law. See the Telephone Records and Privacy Protection Act of 2006.
2. Pretexting to obtain financial records is very illegal. See the Gramm-Leach-Bliley Act.
3. Pretexting and pretending to be a government official, law enforcement officer, or any member of local, state or federal government is uniquely illegal.
4. Pretexting to obtain health information is also illegal. HIPAA’s privacy rules make it illegal to get anyone’s health records without the patient’s direct permission.
Even if you avoid these four obvious pretexting landmines, tremendous caution is recommended if you find yourself going undercover to gather evidence or interview subjects.
Many of the successful challenges to pretexting in court involve cases where the private investigators were merely attempting to “dig up dirt” instead of uncovering unlawful activity (See Uber Caught Hiring Unlicensed Pis, Pretexting), or were using pretexting to gain access to private phone records or medical data. Additionally, courts have not taken kindly to instances where private investigators were misrepresenting themselves as being in positions of authority to the point where the subjects were tricked into making statements they otherwise might not have made. It is clear that the closer the private investigator’s cover is to being a regular “member of the public,” the more generally admissible their evidence is.
Stay safe out there!
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About the Author
Isaac Peck is the Editor of Working PI magazine and the President of OREP Insurance Services, offering customized professional and general liability insurance solutions to private investigators and security firms. He received his master’s degree in accounting at San Diego State University. He can be contacted at email@example.com or (888) 347-5273.
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About Working PI Magazine
Working PI is the most widely read print magazine for private investigators nationwide and is dedicated to providing the latest news, analysis, and information to private investigators across the United States. Led by experienced journalists and media professionals, and informed by YOU—the private investigators in the field. Working PI is published by OREP Insurance Services, LLC (OREP.org), providing insurance to professional service firms for over 20 years. Have a risk management or an insurance question? Give us a call at 888-347-5273.
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