Eleventh Circuit agrees that LabMD must wait to bring claims against FTC

Published On January 22, 2015 | By Michaelene Hanley | FTC & State AG
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LabMD’s challenge to the Federal Trade Commission’s (FTC) authority to regulate data security again stalled in the Eleventh Circuit on Tuesday, January 20, 2015. The lengthy procedural drama continued—without a major plot twist—when the Eleventh Circuit upheld the District Court’s dismissal of LabMD’s claims against the FTC for lack of subject matter jurisdiction. LabMD originally brought claims against the FTC contesting its use of enforcement authority to regulate health care data privacy and security, arguing among other claims that the FTC’s enforcement proceeding against LabMD was ultra vires, violated the Due Process Clause, and violated the First Amendment on account of allegations that the FTC’s decision to file a complaint was retaliatory for comments by LabMD’s CEO.

The Eleventh Circuit upheld the District Court’s decision dismissing LabMD’s central claim, because the FTC’s complaint against LabMD and its January 2014 order denying LabMD’s motion to dismiss the complaint did not constitute a final agency action, as required by the Administrative Procedure Act (APA). The Eleventh Circuit explained that the “FTC Complaint and Order are not sufficiently definitive, cleanly legal, or immediately burdensome so as to require our review at this stage.” The Court declined to “interfere in an ongoing agency process,” and held that the court could not hear LabMD’s claim until the administrative proceeding has finished. The court dismissed LabMD’s other claims as “premature,” because they are “intertwined with [the] APA claim,” with supporting facts that are “indistinguishable from those relating to the procedures and merits of the FTC action.” Thus, the Court reasoned, these claims must wait to be heard with the central claim at the end of the administrative proceeding.

Photo by Travis Wise from Flickr

About The Author

Michaelene works with ZwillGen attorneys on a broad range of matters, including litigation, law enforcement compliance, regulatory compliance, and product counseling. Prior to joining ZwillGen, Michaelene was a legal intern with the Litigation and Legal Policy Group in the Office of International Affairs at the U.S. Department of Justice during the summer of 2013. During law school at Indiana University Maurer School of Law, she served as a research assistant to Professor Fred Cate, focusing on U.S. and international cybersecurity, surveillance, and privacy issues.