Wyndham's motion to dismiss FTC data security complaint denied

One of the cases I’ve been covering on this blog is LabMD‘s challenge to the FTC’s authority to enforce data security in the health care sector. In its recently filed complaint in federal court in Georgia, LabMD raises some of the same issues raised by Wyndham in federal court in New Jersey, including the issue of promulgating regulations prior to enforcement so that there is fair notice. But the LabMD suit also raises some additional issues such as whether by enacting HIPAA, Congress intended it to be the sole agency enforcing data security of protected health information.

Today, Judge Esther Salas of the federal court in New Jersey rejected Wyndham’s arguments and denied their motion to dismiss.  In her opinion, she held that the FTC does have the authority to enforce data security, and it does not have to promulgate regulations prior to enforcement. Her ruling also affirms FTC’s position that small harm to a lot of people constitutes “significant” harm or injury under the FTC Act.

I reached out to Michael Daughterty of LabMD to get his response to today’s ruling in the Wyndham case, and he provided this statement:

The closer one looks at the LabMD case compared to the Wyndham case, one will see fewer and fewer similarities, but it is still disappointing, but not surprising, that an Article III judge would set aside the concern for defendant’s rights and allow this case to continue. The FTC has not been assigned jurisdiction in data security and has not promulgated rules or standards. The world cannot read minds. Judges need to step in an have the strength to look at the big picture.

It appears the judge put that aside to protect potential victims, and while that may appear admirable, rulings such as this validate and enable agency overreach, do nothing to protect future victims of cybercrimes, and will further deny the business community’s right to know what is expected of them. The judge and FTC have taken the easy way out, made themselves look good, and done nothing to solve the overall problem of data security that is so important to all of us. The effectiveness of the courts and FTC is sorely lacking.

About the author: Dissent

Comments are closed.