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06/4/2014

Cause of Action: Time for Department of Labor to Stop Hiding Behind Regulations

FOR IMMEDIATE RELEASE                                 CONTACT: Adam Temple

June 3, 2014                                                          temple@jdafrontline.com

 

Cause of Action: Time for Department of Labor to Stop Hiding Behind Regulations

WASHINGTON – In court filings today on behalf of Rhea Lana, Inc., a national children’s consignment event company, Cause of Action opposed the Department of Labor’s (DOL) motion to dismiss its lawsuit seeking to free the company from DOL’s attempts to ban consignor-volunteers at for-profit enterprises.

Rhea Lana, Inc. hosts consignment sales in numerous cities that allow parents and other family members to sell children’s clothing and items to other families. Consignors keep approximately 70 percent of the profits generated from their items, and Rhea Lana, Inc. keeps 30 percent.  The small family business has grown to include sales in 23 states across the country.  Consignors assist at sales events in exchange for the option to shop early. Given the tough economic reality facing many parents with young children, shopping for affordable, quality children’s items at Rhea Lana, Inc. events has led to overwhelmingly positive experiences for many families.

In January 2013, DOL commenced an investigation and concluded, despite receiving no apparent complaints from parents and other participants, that consignment event consigner-volunteers were “employees” under the Fair Labor Standards Act (FLSA).

The suit, filed in the U.S. District Court for the District of Columbia, argues that the DOL acted arbitrarily and outside the law when it classified Rhea Lana’s consignor-volunteers as employees under the FLSA. Cause of Action seeks a declaration that Rhea Lana, Inc. consignor-volunteers are not employees under the FLSA and an injunction prohibiting the DOL from bringing action against the company.

About Cause of Action:

Cause of Action is a non-profit, nonpartisan government accountability organization that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it.  For more information, visit www.causeofaction.org.

About Rhea Lana, Inc.:

Founded by Rhea Lana Riner in her living room 16 years ago and headquartered in Conway, Arkansas, Rhea Lana’s Children’s Consignment hosts semi-annual sales.  With Arkansas roots, Rhea Lana’s Franchise Systems, Inc. is rapidly growing with 69 locations in 23 states.  The company is the first consignment sale business in the country to offer on-line management and real time tracking of merchandise through a computerized inventory system and a convenient mobile application. For more information, visit www.rhealana.com.

To schedule an interview with Cause of Action’s Executive Director Dan Epstein, contact Adam Temple, temple@jdafrontline.com

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06/3/2014

National Law Journal: FTC Data Security Trial on Hold Pending Investigation

Read the full story: National Law Journal

The FTC’s smoking gun: a file with information about 9,300 consumers, including names, birth dates, social security numbers and medical tests results for conditions such as cancer. According to the FTC complaint, a LabMD employee installed a peer-to-peer file sharing application on her work computer and inadvertently shared the file.

 

The file was found by Tiversa—but LabMD lawyers say just how that happened is unclear. Tiversa “has patented technology which allows it to search peer-to-peer networks in an unprecedented breadth and volume,” William Sherman II, a partner at Dinsmore & Shohl retained by non-profit watchdog Cause of Action to represent LabMD, said during opening statements on May 20.

 

Sherman said LabMD employees couldn’t find the file on the peer-to-peer network even when searching using its precise name. “The evidence will show that the only entity able to find this file has patented technology,” Sherman said.

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06/3/2014

Atlanta Business Chronicle: Congressional probe delaying LabMD’s lawsuit

Read the full story: Atlanta Business Chronicle

A lawsuit filed by an Atlanta-based medical testing lab against the Federal Trade Commission has been put on hold following word that a congressional committee is investigating a company involved in the case.

 

Michael Daugherty, LabMD’s CEO, welcomed news that Congress is looking into the FTC’s involvement with Tiversa.

 

“The benefit of the doubt the federal government enjoys needs to be scrutinized when to comes to the behavior of the FTC,” Daugherty said Tuesday during a conference call with reporters.

 

Reed Rubenstein, senior vice president of litigation for Cause of Action, the government accountability group representing LabMD, said the court case has been postponed until June 12.

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05/30/2014

FTC Proceedings Against LabMD Stalled by Congressional Investigation

FOR IMMEDIATE RELEASE            CONTACT: Adam Temple, (843) 722-9670

May 30, 2014                                                              temple@jdafrontline.com

FTC Proceedings Against LabMD Stalled by Congressional Investigation

Tiversa Employee Indicated he Would Take the 5th, House Oversight Committee Investigates Tiversa Dealings with FTC

Congress launched an investigation into Tiversa and their dealings with federal agencies including the FTC which threw a wrench into the FTC’s administrative proceedings against LabMD today.

“An investigation by the House Oversight committee will hopefully bring the accountability and transparency that we have yet to see from the FTC. We will now wait to see what Congress is able to uncover,” said Reed Rubinstein, of Cause of Action.

The investigation was brought to light in FTC proceedings today, which prompted former Tiversa employee and potential trial witness Rick Wallace to indicate his intention to take the 5th, through his attorney.

Tiversa CEO Robert Boback’s attorney asked for more time before his client would testify.

Judge Chappell granted a recess until June 12.

 

The unofficial transcript from today’s proceedings:

Disclaimer: This is a draft and subject to change and revision by the court – it is not the final transcript.

FTC v. LabMD May 30, 2014 Unofficial Trial Transcript by CauseOfAction

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05/29/2014

Bloomberg BNA: Groups Push Obama Executive Order To Halt IRS Proposed Section 501(c)(4) Rules

An excerpt from a May 2, 2014 Bloomberg BNA story:

Cause of Action, a conservative government accountability group, is asking the Office of Information and Regulatory Affairs to force the Internal Revenue Service to declare that its proposed rule on limiting the political activities of Section 501(c)(4) organizations is “a significant regulatory action” under an executive order signed by President Barack Obama.

 

Executive Order 13563, signed by Obama in January 2011, says that in deciding whether and how to regulate, federal agencies should assess all costs and benefits of available regulatory alternatives–including the alternative of not regulating. The order affirms and builds on Executive Order 12866 signed by former President Bill Clinton in 1993 .

 

Cause of Action said the Office of Management and Budget is attempting to “game the system” by saying the executive orders don’t apply to the 501(c)(4) rules.

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05/27/2014

Atlanta Journal Constitution: Medical lab battles feds over privacy

Read the full story: Atlanta Journal Constitution

Daugherty said he has spent more than a half-million dollars on the case so far. He’s had help from Cause of Action, a nonprofit group that said it got involved to help a small business with limited resources fight back against unfair regulation.

 

“I don’t think Congress intended for the FTC to regulate HIPAA,” said Daniel Epstein, the group’s executive director. “If it wanted to, they could authorize a law to do so.”

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05/23/2014

Warren’s Washington Internet Daily: FTC Testimony in Data Security Case to Address Standards, May Affect Hill Debate, Say Observers

Read the full story: Warren’s Washington Internet Daily

Despite the multiple dismissals, LabMD will continue its legal battle outside the ALJ process, Rubinstein told us. Federal judges have been receptive to LabMD’s argument, he said. Judge William Duffey, presiding over the May 7 hearing in Atlanta, repeatedly berated the FTC’s investigative process as inadequate and “mean-spirited” (http://bit.ly/1mOWPXx). “You are living through a hearing of ‘I’m sorries,'” Duffey told Department of Justice lawyer Perham Gorji, representing the FTC. “It comes from the fundamental refusal of you and your colleagues with candor and with transparency to say, ‘Here is where we are going on this.'” Rubinstein said Duffey’s “utter incredulity at what the FTC has done” is why LabMD must press on. “There’s still a substantial amount of confusion — at least certainly from Judge Duffey’s perspective and from ours — as to exactly what their case is and what they have to prove,” he said.

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