Online resources for the case of LabMD Inc. v. FTC (11th Cir.) and the FTC’s response after the decision

Did the LabMD Case Weaken the FTC’s Approach to Data Security?

Comment: The LabMD Decision Reins in the FTC’s Authority to Issue Broadly Worded and Ill-Defined Orders
https://www.natlawreview.com/article/labmd-decision-reins-ftc-s-authority-to-issue-broadly-worded-and-ill-defined-orders

FTC Official Website
https://www.ftc.gov/enforcement/cases-proceedings/102-3099/labmd-inc-v-federal-trade-commission

LabMD, Inc., In the Matter of
https://www.ftc.gov/enforcement/cases-proceedings/102-3099/labmd-inc-matter 

Tom Kulik: The 3 Biggest Data Security Takeaways From The 11th Circuit Decision In FTC v. LabMD
https://abovethelaw.com/2018/10/the-3-biggest-data-security-takeaways-from-the-11th-circuit-decision-in-ftc-v-labmd/

Kirk Nahra: Takeaways from the 11th Circuit FTC vs. LabMD decision
https://iapp.org/news/a/takeaways-from-the-11th-circuit-ftc-vs-labmd-decision/

By Jim Harvey, Larry Sommerfeld and Kate Hanniford: LabMD: The End of the FTC in Cyber, or Just a New Path?
https://www.alston.com/-/media/files/insights/publications/2018/07/183465-labmd-client-alert.pdf

Dune Lawrence: A Leak Wounded This Company. Fighting the Feds Finished It Off
https://www.bloomberg.com/features/2016-labmd-ftc-tiversa/

After the 11th Cir. decision, FTC tried to be more specific: 

LightYear Dealer Technologies, LLC, In the Matter of
www.ftc.gov/enforcement/cases-proceedings/172-3051/lightyear-dealer-technologies-llc-matter-0

FTC Administrative Guidelines (non-binding) 
https://www.ftc.gov/tips-advice/business-center/guidance/protecting-personal-information-guide-business 

FTC Proposed Amendment to the GLB Rules.

Negligent infliction of emotional distress (NIED) Notes

Elements of Negligence

  1. Duty of care
  2. Breach
  3. Causation
  4. Injury

Duty of care: foreseeability 

Defendant owes a duty of care to all persons who are foreseeably endangered by his conduct.

  • Don’t as whether a particular defendant could have expected the result.  Instead, ask whether a “reasonable person” could do so
  • Don’t ask if a particular harm is foreseeable. Ask if the category or type of harm is foreseeable

Dillon v. Legg

Background: Prior to this case, only a person who is in the “zone of danger” can be awarded the damages of distress.  This rule applies to the victim’s sister.  However, ther mother was not in the zone of danger despite she had eyewitnessed the accident.

Rule: A defendant’s liability for emotional distress caused to a plaintiff largely depends upon whether the harm was reasonably foreseeable, and foreseeability can be evaluated by considering factors such as:

(1) located near the scene: whether a plaintiff was located near the scene of an accident as opposed to some distance from it,

(2) sensory and contemporaneous observance: whether the shock alleged by the plaintiff resulted from his sensory and contemporaneous observance of the accident, and

(3) closely related: whether the plaintiff and the victim were closely related, as contrasted with an absence of any relationship or the presence of only a distant relationship.

Thing v. La Chusa, 48 Cal.3d 644 (1989)

Rule: A plaintiff may not recover damages for emotional distress caused by observing the negligently inflicted injury of a third person if she was not an eyewitness to the act that caused the injury.

Facts: The mother was nearby, but did not hear or see the accident.

Reasoning: The guidlines in Dillon should be refined to create greater certainty.

A plaintiff may recover damages for emotional distress caused by observing the negligently inflicted injury of a third person if, but only if, said plaintiff:

(1) is closely related to the injury victim;

(2) is present at the scene of the injury-producing event at the time it occurs and is then aware that it is causing injury to the victim; and

(3) as a result suffers serious emotional distress-a reaction beyond that which would be anticipated in a disinterested witness and which is not an abnormal response to the circumstances.

“Drawing arbitrary lines is unavoidable if we are to limit liability and establish meaningful rules for application by litigants and lower courts.”

Justice Broussard Dissent: foreseeability and duty should determine liability in the case of negligent infliction of emotional distress, as they do in other aspects of tort law.

Goldstein v. Superior Court, 223 Cal.App.3d 1415 (1990)

 

Commerce Clause Tests

Liberal Test:

Legislation is proper under the Commerce Clause if, aggregating all the effects of the legislation, the regulation has a substantial effect on interstate commerce. (Wickard v. Fullburn; Heart of Atlanta Motel)

Developed (added) rule in Gonzales v. Raich:

  • It is irrelevant if the regulated activity is (1) purely local, or (2) not regarded as commerce.
  • If failure to regulate the activity would undercut the regulation of the interstate market in the commodity, the congress can do so

Conservative Test

It is established in Lopez and Morrison.  The Congress can regulate:

  • Channels of interstate commerce
  • Instrumentalities of interstate commerce, or persons or things of interstate commerce
  • actvitivies that substantially affect the interstate commerce

Test for finding “Substantial effect” to the interstate commerce:

(1) Economic activity: is there a direct link between the activity and the interstate commerce? The connection to economic activity cannot be too attenuated (Lopez)

(2) Jurisdictional element: is there a jurisdictional limitation (judicial hook) limiting the (challenged congress regulation) from reaching to activities in interstate commerce

(3) Congressional findings: whether the congress has findings of a substantial effect to the interstate commerce (however, in Morrison, the congressional findings in supporting its regulation has been limited — the final call should be subject to the Court)

(4) Provnice of the states: whether the statute affects areas traditionally left to the states.

The Economic Inactivity Rule

Per NFIB v. Sebelius, Congress can not regulate economic inactivity.

Ginsberg (in her dissent) argued that there are substantial effect from the mandatory insurance to the interstate commerce (they are not annuated).  Ginsberg also argued that even the economic inactivity rule applies, there Congress is not regulating inactivity in this case, as everyone will eventually participate in the health care market.

 

Tests for cases involving Equal Protection and Due Process Clauses

Equal Protection:

Principle: State shall not deny to any person within its jurisdiction the equal protection of the laws.

Two Step Assessment:

Step One: Suspect Classification, quasi-suspect classification or others?

Suspect Classification:  Race, religion, nation of origin –> Strict scrutiny

– immutable characteristics

– a discrete and insular minority

– historic discrimination

Quasi-suspect classification: gender –> intermediate scrutiny

Others: rational basis

Step Two: Levels of Scrutiny. 

(a) Strict scrutiny: applied to “compelling state interest”

  • the law is necessary to achieve a compelling purpose; no alternative solution
  • the law must be narrowly tailored

(b) Intermediate scrutiny: applied to “important state interest”

  • the law “substantially related” to the state interest

(c) rational basis: applied to “legitimate state interest”

  • reasonably or rationally related to the state interest
  • reasonable means to achieve the puproses

Due Process Clause

1. Substantial due process: Whether the government has an adequate reason for taking away a person’s life, liberty, or property.

2. Procedural due process: how the government enforces law must be fair. When the state or federal government acts in such a way that denies a citizen of a “life, liberty, or property” interest, the person must first be given notice and the opportunity to be heard

3. Two Step Analysis

Step One: whether the affected is a fundamental right?

Step Two: If yes, strict scrutiny; if not, rational basis.

Finding fundamental rights: in the constitution, about the liberty, autonomy or in the zone of privacy.

Test for finding fundamental rights:

Conservative approach:

  • implicit in the concept of the ordered liberty
  • deeply rooted in this Nation’s history and tradition

List of the recognized fundamenal rights (in addition to those explicitly numerated in the Bill of Rights):

  • right to marry and procreatn (Loving v. Virginia)
  • purchase and use birth control (Grisworld v. Connecticut)
  • custody of one’s own children and raise it as one sees fit (Palmore v. Sidoti)

Liberal approach: right to privacy – things fall into it (zone of penumbra) :

(1) things that are truly private to individual to decide (“Decisional Privacy”); or
(2) things happened in the geographically private places.

4. Strict Scrutiny in the context of due process — same to those in the Equal Protection analysis

Political Question Doctrine – Separation of Powers under US Constitution

Baker v. Carr

Six elements determine the political question.

  1. In the text of Constitution:  textually demonstratble constitutional commitment of the issue to a coordinate political department
  2. Not discoverable: a lack of judicially discoverable and manageable stgandards
  3. policy premised: the impossibility of deciding without and initial policy determination beyond the discretion of the court
  4. disrespect to other branches: the impossibility for a court to independently resolve the case “without expressing lack of respect” for a coordinate branch of the government
  5. Challenging Policy decision already made: An “unusual need for unquestioning adherence to a political decision already made”
  6. Embarrassment: The potentiality of embarrassment from multifarious pronouncements by various departments on one question.

Three categories: 

(a) inter-branch homony: embarrasement and disrespect: 3, 4, 5, 6

(b) text in constitution: 1

(d) capabilty of court: lack of judcially discoverable and manageable standards: 2

Steel Seizure Case

  • Justice black’s majority opinion: explicitly granted in the constitution OR if the congress has authorized the power to president
  • Justice Jackson’s concurrence:
    • Determine if the congress and president is agree, disagree or the congress is silent
    • If in agreement, then president can exercise all inherent power plus power authorized by congress.
    • If disagree, then president can only exercise inherent power in part that do not overlap congress’s power
    • If congress is silent: president can exercise his inherent power + zone of twilight (overlap part that both congress and president have) – case by case

United States v. Curtiss-Wright 

Rule: President has power to criminalize sale of guns to Bolivia by executive order because it is in his inherent power of foreign affairs.

Reasoning: 

  • Unlike the domestic issues that are enumverated in the Constitution, the States have never possessed powers over foreign affairs.  Such power is directly authorized by people to the federal government.
  • The President is the sole organ of the federal government in the field of international relations. Marshall: “The President is the sole organ of the nation in its external relations, and its sole representative with foreign nations.”
  • while the president shall excercise his power within the parameters of Constitution, his power in international affairs is broad
  •  In order to effectively maintain international relations, congressional legislation concerning foreign affairs must accord the President a degree of discretion

Dames & Moore v. Regan

Rule: The President has authority to settle claims through executive orders where the settlement of claims is necessary for the resolution of a major policy dispute between the United States and another country and where Congress acquiesces to the President’s action.