Court Should Dismiss Privacy Group’s Suit Vs. FTC Over Google Buzz Settlement

Cross-posted by Forbes.com at WLF contributor site

On Friday, a federal court in Washington, D.C. will hear what the Federal Trade Commission (FTC) thinks about a lawsuit the online privacy advocate EPIC has filed demanding that FTC charge Google with violations of a settlement agreement between FTC and Google involving Google Buzz.

EPIC isn’t suing Google, and EPIC wasn’t a party to the settlement agreement. But the group wants FTC to embrace EPIC’s view that Google’s soon-to-be-implemented online privacy policy changes tread on certain aspects of the consent order. EPIC argues that administrative law permits third parties to force such action on a federal agency. Because such a view directly encroaches on agencies’ discretion and shifts enormous power to “public interest” activists, business competitors, and assorted gadflies, courts have generally rejected such arguments.

The key issue in this case is not whether Google’s privacy changes run afoul of last year’s agreement with FTC. EPIC obviously thinks so, and devotes most of its injunction motion explaining why. Google doesn’t think so, and provided their thoughts to FTC last month according to one report.

The issue here is whether a non-party to the FTC-Google agreement can force FTC to fine Google. EPIC acknowledges that it cannot bring action under the Federal Trade Commission Act (FTC Act), and instead proceeds under the Administrative Procedures Act (APA) section allowing challenges to agency action “unlawfully withheld.” EPIC tries to make the case that the FTC Act creates a non-discretionary duty for the Commission to act if a consent agreement is violated. But the language EPIC cites relates to the need for the violating party to pay a fine, not for the FTC to take action. FTC has the ultimate discretion over whether a violation occurred and whether to seek a fine. The Supreme Court stated this very clearly in a 1985 APA case, Heckler v. Chaney.

There, the Court ruled that FDA’s decision not to take an enforcement action was presumptively unreviewable, writing, “an agency’s decision not to enforce often involves a complicated balancing of a number of factors which are peculiarly within its expertise.” The presumption could be rebutted, the Court noted, where the statute “has provided guidelines for the agency to follow in exercising its enforcement powers.” The FTC Act contains no such guidelines, so EPIC shouldn’t be able to overcome the presumption.

In fact, as noted by the U.S. Court of Appeals for the D.C. Circuit in Consumer Federation v. FTC, Congress specifically considered and rejected the concept of third parties being able to challenge a Commission cease and desist order. EPIC admits in its injunction motion that “this court has not had occasion to consider whether the FTC is ‘required to take’ enforcement action when its consent orders are violated.” The legislative history cited in Consumer Federation is pretty clear and convincing proof that Congress did not want non-parties directing how the Commission addresses enforcement of its orders or use of its discretion.

Washington Legal Foundation would be the last one to argue that federal agency actions should be immune from judicial review as a general principle. But once a settlement agreement has been reached between an agency and a private entity, the agency should not be compelled to embrace an outside party’s view that the agreement has been breached. EPIC is welcome to communicate its general views to FTC (which they do so quite often) on the Google Buzz settlement, just as Google might avail FTC of its thoughts on whether a competitor like Facebook or Twitter violated its respective privacy agreement with the Commission. But empowering activists or competitors to imprint their views of consent agreement breach on the Commission would be a dangerous and easily abused tool. If Congress wanted such third parties to inject themselves into FTC’s process on such agreements more formally and authoritatively, it would have said so.

3 thoughts on “Court Should Dismiss Privacy Group’s Suit Vs. FTC Over Google Buzz Settlement

  1. Pingback: Update: FTC Urges Court to Dismiss EPIC’s Effort to Compel Action Vs. Google « The Legal Pulse

  2. Pingback: EPIC Fail: Court Denies Group’s Effort to Force FTC to Sue Google « The Legal Pulse

  3. Pingback: EPIC Fail: No Really, EPIC Failed | FeSaadmag.com

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