Law School Case Brief
FTC v. Wyndham Worldwide Corp. - 799 F.3d 236 (3d Cir. 2015)
The relevant legal rule is not so vague as to be no rule or standard at all. 15 U.S.C.S. § 45(n) asks whether the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. While far from precise, this standard informs parties that the relevant inquiry here is a cost-benefit analysis, that considers a number of relevant factors, including the probability and expected size of reasonably unavoidable harms to consumers given a certain level of cybersecurity and the costs to consumers that would arise from investment in stronger cybersecurity. Fair notice is satisfied here as long as the company can reasonably foresee that a court could construe its conduct as falling within the meaning of the statute.
Did the court properly deny the motion to dismiss?
The federal appellate court held that the three requirements in 15 U.S.C.S. § 45(n) may be necessary rather than sufficient conditions of an unfair practice, but it was not persuaded that any other requirements proposed by Wyndham posed a serious challenge to the FTC's claim. Wyndham repeatedly argued there was no FTC interpretation of § 45(a) or (n) to which the federal courts must defer, and, as a result, the courts had to interpret the meaning of the statute as it applied to the Wyndham's conduct in the first instance. Thus, Wyndham could not argue it was entitled to know with ascertainable certainty the cybersecurity standards by which the FTC expected it to conform. The court held that Wyndham could only claim that it lacked fair notice of the meaning of the statute itself, which was a theory that it did not meaningfully raise and was unpersuasive.
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