Meta sued the FTC on Thursday, asking for an immediate halt on the commission’s efforts to modify their 2020 privacy settlement. The social media behemoth claims that the agency’s in-house process to deliberate on the matter violates the US Constitution.
At the center of Meta’s complaint is the allegation that the FTC’s administrative process is biased in favor of its commissioners in a way that an independent court’s proceedings wouldn’t be.
“This is a serious attack by serious lawyers on the way the FTC does business,” said David Vladeck, a law professor at Georgetown University who headed the agency’s Consumer Protection Bureau during the Obama administration.
The lawsuit, filed in the US District Court for the District of Columbia, followed Monday’s dismissal in the same court of Meta’s complaint that sought to require judicial approval for the FTC to reopen the $5 billion agreement—the largest privacy enforcement payment in US history.
Judge Timothy Kelly denied Meta’s motion but declined to weigh in on any constitutional arguments, writing that “what has to happen is Meta has to go and file another lawsuit.” Meta immediately said it would appeal and filed an emergency motion Wednesday at the US Court of Appeals for the District of Columbia Circuit to block the FTC’s move.
Meta’s new lawsuit follows other corporations’ efforts to persuade the federal courts that the FTC’s administrative adjudication process is constitutionally defective. The US Supreme Court opened the door to such arguments with its unanimous combined ruling in Axon Enterprise v. FTC and SEC v. Cochran in April, which allows enforcement targets of the FTC and the Securities and Exchange Commission to challenge the constitutionality of their actions without waiting for an in-house administrative law judge’s decision.
Before the Axon decision, Meta couldn’t have challenged the constitutionality of the FTC’s move to revise its order, which the company hasn’t yet responded to through the agency’s administrative process.
Meta’s “argument is going to be that structurally it does not conform with standards of due process—that is to have the same people who decide to prosecute ultimately decide whether there is a violation,” said William Kovacic, former FTC chairman and current George Washington University law professor.
High Court Parallel
The FTC is far from the only federal agency to find itself on the defensive as court challenges increasingly target administrative authority, noted Jill Fisch, a professor at the University of Pennsylvania’s law school.
The newly filed case follows arguments this week at the Supreme Court in SEC v. Jarkesy over that agency’s ability to seek penalties before in-house judges. Meta’s complaint raises the same questions, including whether Congress can delegate the power to assign disputes for administrative adjudication to an agency—and whether the proceedings violate the enforcement target’s right to a trial by jury.
The high court is expected to rule on the case next summer.
“To the extent that the Supreme Court decides those issues, that’s going to affect Meta,” said Fisch.
To be sure, there are differences in the cases. A key distinction is that FTC claims are not self-enforcing like the SEC’s—a court must approve financial penalties,, Vladeck noted. Moreover, Meta’s complaint speaks specifically to administrative actions decided by the agency’s commissioners, rather than by administrative law judges.
Meta’s complaint, Fisch said, fits into a broader trend set at the Supreme Court level to scrutinize agency power. That’s a question raised not just in Jarkesy and Axon cases, she said, but also in two others: the high court’s 2022 ruling in West Virginia v. EPA, which diminished agency power to interpret laws, and 2020’s Seila Law LLC v. CFPB, which held that the Consumer Financial Protection Bureau’s structure was unconstitutional.
Health-care company Illumina also challenged the constitutionality of the FTC’s enforcement setup this year in a case before the US Court of Appeals for the Fifth Circuit.
The cases are “all about scrutinizing the way administrative agencies have functioned since the 1930s,” said Fisch. “So there may be arguments that yes, this is the way that things have been done, but the world has changed and the powers that they are exercising are different—and that that might be a justification for a closer look at what they’re doing.”
The new FTC case bears other similarities to challenges to the CFPB, Vladeck said. In 2020 the Supreme Court balked at the restrictions on a president’s ability to fire the financial protection agency’s director written into the bureau’s establishing statute. Meta’s complaint points to a similar structure in place at the FTC.
A court ruling that the FTC’s enforcement action is unconstitutional could set in motion appeals that would bring the issue before a Supreme Court that seems receptive to a reassessment of the legitimacy of the structure and procedure of the commission and other regulatory agencies, Kovacic said.
“I think what the Supreme Court, or at least some justices on the Supreme Court, have signaled is a willingness to cut back on the scope of administrative agency power,” said Fisch.
Signals from the high court haven’t all been aligned with plaintiffs against agencies, however. In October the court signaled it would likely back the CFPB in a challenge to the constitutionality of its funding structure set under the Federal Reserve.
Privacy Fallout
The case will also slow down the FTC’s action against Meta, both Vladeck and Kovacic said.
The FTC proposed updates to the agreement in May that would limit how the company uses facial recognition and ban it from profiting off the data of children, potentially leading to major changes in Meta’s business model.
“I just don’t see how the FTC is going to be able to move ahead until this case is resolved, one way or another,” said Vladeck.
A ruling going against the FTC could jeopardize its ability to protect consumers and their privacy, said John Davisson, senior counsel and director of litigation at the Electronic Privacy Information Center.
“They are basically saying decades of congressional enactment authorizing the FTC to do enforcement work and decades of FTC practice in which they’ve done that work has secretly the whole time been unconstitutional,” said Davisson.
Privacy advocates and members of Congress critical of Meta’s handling of children’s data and online safety blasted the lawsuit and raced to the agency’s defense.
“Meta’s baseless lawsuit is a weak attempt to avoid accountability for its repeated failures to protect kids’ privacy online,” Sen. Edward Markey (D-Mass.), author of the Children’s Online Privacy Protection Act, the federal law that Meta is accused of violating, said in a press release. “When a Big Tech company wants to take the federal cop off the beat, it’s probably because it doesn’t want to be caught.”
Facebook didn’t immediately respond to a request for comment on Markey’s statement.
The case is Meta Platforms Inc. v. The Federal Trade Commission, D.D.C., No. 1:23-cv-03562, complaint filed 11/30/23.
To contact the reporters on this story:
To contact the editors responsible for this story:
Learn more about Bloomberg Law or Log In to keep reading:
See Breaking News in Context
Bloomberg Law provides trusted coverage of current events enhanced with legal analysis.
Already a subscriber?
Log in to keep reading or access research tools and resources.