Consumer Fraud

FTC Lawyers Granted Immunity for LabMD Data Breach Probe

privacy internet keyboard Facebook web 375x121 FTC Lawyers Granted Immunity for LabMD Data Breach ProbeTwo Federal Trade Commission (FTC) lawyers are immune from a lawsuit filed by the head of an Atlanta-based medical testing company who sued the FTC officials in 2015, claiming they stepped up an enforcement action against his company after he publicly criticized them.

The ruling from the three-judge panel in the D.C. Circuit shields FTC lawyers Alain Sheer and Ruth Yodaiken from retaliation allegations lodged by LabMD’s chief executive Michael Daugherty, whose company was being investigated for a data breach that exposed the personal information of nearly 10,000 patients.

The decision of the Washington D.C. federal appeals court overturns an earlier decision by U.S. District Judge Tanya Chutkan, who dismissed many of Mr. Daugherty’s allegations but kept in place claims that the FTC attorneys violated his First Amendment Rights by escalating the FTC’s investigation.

According to The National Law Journal, Mr. Daugherty claimed the FTC lawyers brought a data privacy case against him based on “fictional” evidence. The following year, FTC commissioners found that LabMD had failed to take adequate measures to protect its patients’ personal information.

Mr. Daugherty claimed “the weight of the data breach investigation crushed his company,” according to The National Law Journal. He said the attorneys did this as punishment for criticizing the FTC’s probe to the media as a “fishing expedition” and in a book he wrote about the investigation called “The Devil Inside the Beltway,” he accuses the FTC and federal government of surveillance and overreach.

However, the D.C. Circuit panel found that “the undisputed data-security breach underlying the FTC’s investigation” justified the agency’s actions.

“The federal appeals court ruling said that, even if FTC lawyers did seek to retaliate against Daugherty over his public comments, their actions could not be deemed violations of his rights unless there were ‘plausible allegations’ that the commission would not have otherwise brought an enforcement action,” The National Law Journal explains.