TR Daily Court Warns FTC, Facebook Future Deference Uncertain
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Friday, April 24, 2020

Court Warns FTC, Facebook Future Deference Uncertain

The U.S. District Court for the District of Columbia has approved the Federal Trade Commission’s $5 billion settlement of privacy issues last year with Facebook, Inc., while warning that the court might not be so deferential to a future settlement.

The case stemmed from a year-long investigation into whether Facebook had violated a 2012 consent order that settled a previous FTC investigation into alleged privacy violations by the company.

The agency’s two Democratic commissioners dissented from last year’s decision approving the settlement, arguing that the agency should have pushed harder, even to the point of litigation, to obtain stronger deterrents (TR Daily, July 24, 2019).

In a memorandum opinion filed yesterday in “U.S. v. Facebook, Inc.,” U.S. District Judge Timothy J. Kelly noted that “the injunctive relief in the amended administrative order to be entered by the FTC contains new measures aimed at ensuring that Facebook complies with its legal obligations going forward. Under the amended administrative order, Facebook will have to consider privacy at every stage of its operations and provide substantially more transparency and accountability for its executives’ privacy-related decisions.”

He said, “While the Court might well have fashioned different remedies were it doing so out of whole cloth after a trial, none of amici’s criticisms call into question the Stipulated Order’s reasonableness, or whether it is otherwise appropriate.”

He added that concerns by amici filers about the breadth of the release granted Facebook from further claims “do not ultimately cast doubt on whether the Stipulated Order is in the public interest. First, the Stipulated Order does not strip amici—or anyone else in a similar situation—of any rights, because they have no right to enforce either Section 5 of the FTC Act or the 2012 Order. As even they acknowledge, Section 5 of the FTC Act does not contain a private right of action.”

The judge added, “Second, the admittedly broad scope of the release does not mean that the settlement is not in the public interest. As the United States explains, the Stipulated Order does not stop the FTC from bringing new enforcement actions against Facebook should it learn of additional violations of Section 5 of the FTC Act, even if those violations occurred before July 12, 2019.”

Judge Kelly concluded, however, by noting that “under the Stipulated Order [this court] retains jurisdiction over this matter, including to enforce its terms. … In the event that the parties return to this Court because the United States alleges—once again—that Facebook has reneged on its promises and continued to violate the law or the terms of the amended administrative order, the Court may not apply quite the same deference to the terms of a proposed resolution.”

In a separate memorandum opinion, Judge Kelly denied motions by the Electronic Privacy Information Center and Leonid Goldstein to intervene, finding that both parties lacked standing to intervene.

FTC Chairman Joe Simons said, “We are pleased with the Court’s decision. As the Court notes, the historic $5 billion settlement is ‘by far’ the largest monetary penalty ever obtained by the United States on behalf of the FTC and the ‘second largest in any context.’ At the same time, the Court also highlights that the conduct relief included in this settlement will require Facebook ‘to consider privacy at every stage of its operations and provide substantially more transparency and accountability for its executives’ privacy-related decisions.’” —Lynn Stanton, [email protected]

MainStory: FederalNews FTC Courts Privacy InternetIoT

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