From: Regulatory Transparency Project
Mike Daugherty was the CEO of LabMD, a medical testing lab put out of business by the FTC. He has spent most of the last decade defending his company against charges that it had deficient cybersecurity practices. The early years of this battle are recorded in his book, “The Devil Inside the Beltway”. In so doing, he has become the only litigant to challenge the basic authority that underlies more than 200 enforcement actions relating to cybersecurity and online privacy that the FTC has brought over the past 15 years. Every one of the 200+ litigants before him – including some of the largest companies in the world – have settled with the FTC, creating an unquestioned and untested belief that the FTC has broad authority to regulate in these areas.
Following oral arguments last month before a panel of the 11th Circuit Court of Appeals, it seems entirely possible that Mike, a David against the FTC’s Goliath, is going to prevail. In so doing, he may well topple key pillars of the FTC’s cybersecurity and online privacy edifice.
Mike’s story, however, is about far more than cybersecurity. It is about the owner of a small company who had the audacity to stand up to the administrative state, to tell the emperors of a federal agency that they had no clothes, and to stand on principle, refusing to accept a settlement offer to make the charges that he believed were baseless go away. His story is remarkable because it tells us what it takes to fight an administrative agency.
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