LabMD Sues FTC Complaint Counsel Lawyers Over Data Security Case

LabMD Sues FTC Complaint Counsel Lawyers Over Data Security Case

C. Ryan Barber reports that one week after the initial decision by Administrative Law Judge D. Michael Chappell in FTC v. LabMD, Michael Daugherty and LabMD filed a civil suit against three FTC attorneys involved in the case. The suit, which names Carl Settlemyer, Alain Sheer and Ruth Yodaiken as defendants, was  filed Friday in U.S. District Court for the District of Columbia.

Barber writes:

Describing the FTC’s pursuit of LabMD as “illegal and unconstitutional,” Bailey & Ehrenberg partner Jason Ehrenberg based much of the suit on the agency’s interaction with Tiversa, a data security firm that came under congressional scrutiny last year over accusations that it hacked a LabMD computer and tried to blackmail the company.

“Every step of the way, the defendant FTC attorneys supported their actions with lies, thievery and testimony from a private company, Tiversa, whose business model was based on convincing companies to pay them to ‘recover’ files that, in truth, they hacked from computers all over the world,” Ehrenberg, who is representing LabMD and its owner, Michael Daugherty, wrote in the lawsuit.

Much of the complaint reiterates LabMD’s claims about Tiversa, Inc., and its CEO, Robert Boback, and takes the position that FTC complaint counsel knew — or should have known — that they were using fraudulent data. Further, the suit alleges, complaint counsel misled the commissioners to pursue what is described as a vindictive case and a conspiracy to deprive Daugherty and LabMD of their constitutional rights.

Read more about the lawsuit on National Law Journal. The FTC  has not yet formally announced whether they will appeal Judge Chappell’s initial decision, although a statement made last week suggests that they are likely to.

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