May 28, 2021

In the wake of the Federal Trade Commission's recent shift to Democratic leadership and its loss of a key enforcement tool thanks to the U.S. Supreme Court's recent AMG Capital decision, the agency is likely to tap into fresh approaches for seeking remedies and crafting rules in the privacy and data security space. 

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One such move that's already been confirmed by Slaughter will be efforts by the commission to work "more frequently and more enthusiastically" with state attorneys general, who for the most part will continue to be able to seek monetary injunctive relief in consumer protection and privacy matters. 

Stephen H. Levins, the executive director of the Hawaii's Office of Consumer Protection, told Law360 that it was "unfortunate" that the Supreme Court chose to strip the FTC of its power to pursue restitution, given the importance of the commission being able to not only stop wrongdoing but to also get compensation for consumers on a nationwide basis. He said he hoped Congress would act quickly to restore this power and that, in the meantime, he expected his office to continue to leverage the "close" and "mutually beneficial" relationship it's established with the FTC over the years to ensure that consumers remain protected.

"From the FTC's perspective and from the states' perspective, including Hawaii's, [coordinating on enforcement actions] certainly is one of the paths forward to making sure that consumers are adequately protected and receive adequate restitution," Levins said, adding that he didn't expect his agency's frequently used restitution abilities to be affected by the Supreme Court's decision.

While such coordination is likely to require both sides to compromise on their approach and objectives, the mutual desire to ensure that consumers are able to continue to obtain monetary relief, particularly in fraud cases where such losses are easier to quantify, is likely to remove some of the traditional barriers to cooperation, noted Rachel Rodman, a partner at Cadwalader Wickersham & Taft LLP.

"The recent Supreme Court decision has created a need on behalf of the federal government for state attorneys general to act on the authority that the FTC no longer has, and that creates a powerful incentive for cooperation that can overcome impediments to coordination," Rodman said. 

Betsy A. Miller, a partner at Cohen Milstein Sellers & Toll PLLC and chair of the public client practice group, predicted that the "sweet spot" for states and the FTC to work together will be by "joining forces at the investigatory stage" while filing separate enforcement actions. 

"The state will be able to pursue its claims for civil penalties, restitution and disgorgement, as well for other injunctive relief; meanwhile, the FTC can file a federal case for injunctive relief that will impact the company's behavior nationwide, not just in the state that sued," Miller said, adding that the partnership also allows states to tap into the additional resources and expertise that the FTC brings to the table in areas of growing interest for state attorneys general, such as big data, data privacy and dark patterns.

While both Democrats and Republicans are likely to have an interest in these issues, having Democratic leadership in roughly half of the states and at the FTC is likely to further propel these efforts, given that Democrats are typically more aggressive in the privacy space, noted former Maryland Attorney General Douglas Gansler, who now heads Cadwalader's state attorneys general practice. 

"We'd expect to see the kind of relationship between these regulators that we saw during the Obama administration, with the seamless exchange of complaint information," Gansler said. "The Supreme Court case makes it even more interesting, because it makes state attorneys general even more important on the monetary relief side and there's an ability and desire to work together that hadn't been there before." 

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