What does this classic John Cougar (this is so old he still used “Cougar” as his middle name) Mellencamp video have to do with privacy law?
Well, probably not much, but I like the song and it’s my blog. But, beyond that, it does remind me of the ongoing battle between the Wyndham Hotel company and the Federal Trade Commission. In this scenario, Wyndham would be Cougar Mellencamp and The FTC would be the “authority.” The FTC brought the action alleging that Wyndham did not properly protect its customers personally identifiable information.
Wyndham went on the attack immediately. It filed a motion to dismiss arguing that the FTC doesn’t have authority to regulate privacy. And that is an interesting point. The FTC regulates privacy not under any specific grant of authority from Congress, but rather through Section 5(a) of the Federal Trade Commission Act. That statute prohibits anyone from utilizing “unfair or deceptive acts” affecting commerce. In the FTC’s view, this concise declarative sentence gives it broad powers to police the privacy policies and procedures of pretty much any business in America.
Wyndham as you may guess, disagrees. It initially asked the court to dismiss the case in its entirety on the theory that absent more explicit direction from Congress, the FTC lacks the power to broadly regulate privacy. Unfortunately for Wyndham, in April of this year, the court sided with the FTC on that point.
Undaunted, three of the Wyndham entities named in the FTC suit next filed a motion to dismiss arguing that they should be dismissed because those entities (Wyndham Worldwide Corp., Wyndham Hotel Group, LLC and Wyndham Hotel Management, Inc.) had nothing to do with setting or enforcing privacy policies across the chain. The only proper party apparently was Wyndham Hotels and Resorts, LLC. This is a common strategy in litigation – start with the “big” argument, and if that doesn’t work, chip away with less sweeping approaches.
But, again, much like the song, authority keeps on winning. The court denied the motion to dismiss, finding that the FTC properly alleged that the Wyndham entities operated as a “common enterprise.”
On the bright side for Wyndham, the trial court, just two days ago, agreed to allow Wyndham to immediately appeal the April, 2014 ruling on the FTC’s authority to regulate. This question has massive implications. We will see how the Third Circuit Court of Appeals rules. But, ultimately, maybe we will discover that in fact, authority doesn’t “always win.”