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10/3/2017

The FTC Raided My Office, Found Nothing, And Is Destroying My Business Anyway

The FTC Raided My Office, Found Nothing, And Is Destroying My Business Anyway

ROBERT CUPO

Without due process or conviction in a court of law, the government is destroying my family’s business.

In early May, federal investigators raided my small tech-support company, Vylah Tec LLC, d/b/a “V-Tec,” on suspicion of “deceptive” sales practices. The raid was part of a politically hyped campaign by the Federal Trade Commission with the Florida Attorney General’s office, dubbed Operation Tech Trap, to “crack down on tech-support scams.” The problem: My business is not a scam.

Read the full article at Investor’s Business Daily.

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09/26/2017

Media Recap: Court Dismisses FTC’s Unfairness Count Against D-Link Systems

 

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09/25/2017

Family Business Fights Back Against FTC, Files Appeal After Lower Court Wrongly Granted Injunctive Order

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed its opening brief in the 11th Circuit Court of Appeals on behalf of a family-run tech support company, Vylah Tec, LLC (“V-Tec”), after the Federal Trade Commission (“FTC”) used misleading evidence to convince the lower court to grant a damaging injunctive order against the company. V-Tec is a small start-up, owned by Robert Cupo, that provides tech support to customers who have purchased electronic devices from the Home Shopping Network and other shopping channels. V-Tec also generates revenue from selling third-party antivirus and other data security software.

In May, the FTC, in conjunction with the Florida Attorney General’s office, raided the company’s headquarters on suspicion of “deceptive” sales practices, but were unable to uncover any concrete evidence of wrongdoing. In court, the FTC cited two examples of recorded calls that were both mischaracterized. A Florida federal judge granted the government’s request for a preliminary injunctive order (“PI”) that turned the company’s operation over to a third-party receiver and froze the assets of Mr. Cupo and several of his family members. In August, CoA Institute filed a motion to stay the district court’s order. While that decision is still pending, today’s brief is the first in CoA Institute’s appeal of the district court’s decision.

The brief states:

“The PI was granted without benefit of an evidentiary hearing, without application of the proper legal standard for issuing a preliminary injunction, and without application of the proper legal standard for analyzing the likelihood of success on the merits. It was based on untested and facially inadequate factual allegations.

“The Government has conceded that it submitted false evidence and mischaracterized other evidence it offered to the trial court, but it has done nothing to correct the record. To the contrary, the Government insists that the lower court and this Court condone its false evidence to crush a small business and to personally destroy its managers… The Government is seeking to bulldoze V-Tec before this Court can even rule on this appeal. That is not due process, and it certainly is not justice.”

CoA Institute Senior Counsel Cynthia Crawford: “The FTC’s facts in this case are either incomplete or patently false. Without evidence, it was wrong for the district court to grant an order that is draining V-Tec’s finances and destroying its reputation. We urge the 11th Circuit Court of Appeals to reexamine the flawed evidence and allow the Cupo family the due process they deserve, before their company is destroyed.”

The full brief can be found here

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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09/20/2017

D-Link Systems Secures Significant Victory in Court Battle Against FTC

Judge dismisses ‘unfairness’ allegations citing complete lack of consumer harm

SAN FRANCISCO – A federal judge has dismissed three counts against D-Link Systems, Inc. from a complaint brought by the Federal Trade Commission (“FTC”) involving baseless charges regarding the company’s data security practices for its consumer routers and IP cameras. Cause of Action Institute (“CoA Institute”) represents D-Link Systems in its defense.

The Court dismissed the FTC’s Section 5 “unfairness” claim due to the “absence of any concrete facts” supporting the FTC’s allegations of potential consumer harm. The Order states:

The FTC does not identify a single incident where a consumer’s financial, medical or other sensitive personal information has been accessed, exposed or misused in any way, or whose IP camera has been compromised by unauthorized parties, or who has suffered any harm or even simple annoyance and inconvenience from the alleged security flaws in the DLS devices.

In March, Michael Pepson, counsel at CoA Institute, argued before the Court that the case should be dismissed due to, among other things, the lack of facts supporting the government’s claims. Pepson argued that the FTC’s complaint includes only vague, unsubstantiated allegations with no mention of an actual breach of any D-Link product, or any harm to a single consumer.

In response to the ruling, Pepson stated: “We are grateful to the Court for taking the time to hear the arguments, carefully study the questions presented, and issue a well-reasoned decision on D-Link Systems’ motion to dismiss. Cause of Action Institute remains proud to represent D-Link Systems in this litigation.”

For information regarding this press release, please contact Zachary Kurz, Director of Communications at CoA Institute: zachary.kurz@causeofaction.org

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08/21/2017

Drain The Swamp, But Stock The Pond At FTC (John Vecchione Opinion-Forbes)

Drain The Swamp, But Stock The Pond At FTC

 By John J. Vecchione, President of Cause of Action Institute

 Efforts by the Trump administration to reduce regulatory burdens on American businesses would be enhanced if the president acts quickly to fill vacant positions at the Federal Trade Commission (FTC).

 My organization, Cause of Action Institute, recently wrote to the president to urge immediate action to appoint commissioners. New leadership could help rein in the agency’s pattern and practice of regulatory overreach, and allow the pursuit of innovation, without fear of abusive and unconstitutional enforcement actions.

Read the full article at Forbes.com

 

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08/15/2017

CoA Institute Sues FTC for Records Improperly Withheld Under Immunity Reserved for Congress

Washington, D.C. – Cause of Action Institute (“CoA Institute”) today filed a lawsuit against the Federal Trade Commission (“FTC”) for improperly withholding records related to the agency’s communication with the U.S. House of Representatives Committee on Oversight and Government Reform. CoA Institute requested these records under the Freedom of Information Act (“FOIA”) in October 2014.

The agency redacted records under various FOIA exemptions, but also refused to release information on the basis of the Speech or Debate Clause of the U.S. Constitution, a safeguard intended to avoid direct interference with legislative activities and protect members of Congress or their aides from judicial inquiry in certain court proceedings.

CoA Institute Counsel Ryan Mulvey: “The FTC failed to provide sufficient justification for its redaction of records. For example, the Speech or Debate Clause is neither a withholding statute nor a privilege that can exempt agency records from disclosure. The Clause is meant to protect lawmakers and staff from harassment in the courts. The FTC is the defendant in this case; the Oversight Committee is not. The FTC is abusing the Constitution to withhold records that the public has a legal right to review.”

The Speech or Debate Clause provides that “for any Speech or Debate in either House,” Senators and Representatives “shall not be questioned in any other Place.” The Clause is meant is to bar lawsuits that would hold individual legislators or their aides liable for legitimate congressional activities or that could interfere with ongoing congressional inquiry. It does not permit other branches of government, let alone an independent agency such as the FTC, to redact agency records simply because they implicate congressional communications.

From the FTC’s response in this case, it is unclear how the Committee on Oversight and Government Reform might have tried to invoke the Speech or Debate Clause through the FTC or how disclosure could interfere with ongoing congressional activity. The agency never indicated which investigations would be jeopardized by the disclosure of the requested records. Rather, the FTC simply claimed the Clause applied without giving an explanation as to why each record should be exempt. Similarly insufficient explanations were provided for the FTC’s use of the recognized FOIA exemptions.

CoA Institute’s lawsuit provides an opportunity for the court to review the Speech or Debate Clause and to limit agencies from using it to justify withholding records.

The full lawsuit is available here. Exhibits are available here.

For information regarding this press release, please contact Zachary Kurz, Director of Communications: zachary.kurz@causeofaction.org

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08/9/2017

Appeals Court Rebuffs EPA Attempt to Expand Its Regulatory Power

In a clear win for separation of powers and limited agency discretion, the D.C. Court of Appeals today ruled in favor of a company that challenged an EPA regulatory action issued in 2015 to require industry to replace its use of hydrofluorocarbons (“HFCs”). The Court found that “the fundamental problem for EPA is that HFCs are not ozone-depleting substances, and thus Section 612 would not seem to grant EPA authority to require replacement of HFCs.” This logic was supported by the EPA itself prior to 2015 when the agency openly deemed hydrofluorocarbons acceptable. But EPA reversed course in 2015 and concluded that some HFCs “could no longer be used by manufacturers in certain products, even if the manufacturers had long since replaced ozone-depleting substances with HFCs in accordance with the law.” EPA attempted to justify its position by classifying hydrofluorocarbons as a contributor to climate change.

The Majority opinion stated:

“Supreme Court cases that have dealt with EPA’s efforts to address climate change have taught us two lessons that are worth repeating here. First, EPA’s well-intentioned policy objectives with respect to climate change do not on their own authorize the agency to regulate. The agency must have statutory authority for the regulations it wants to issue. Second, Congress’s failure to enact general climate change legislation does not authorize EPA to act. Under the Constitution, congressional inaction does not license an agency to take matters into its own hands, even to solve a pressing policy issue such as climate change.”

The Court found that EPA’s legal interpretation to be “inconsistent with the statute as written,” and therefore vacated the 2015 Rule. The Court’s opinion speaks to the need for federal agencies to respect the separation of powers required by the U.S. Constitution and highlights the Judiciary’s important role to intervene when an agency oversteps its statutory authority.

Cause of Action Institute (“CoA Institute”) has repeatedly stressed this point in matters involving other rogue federal agencies.  For example, in a recent amicus curiae brief filed in support of a business facing a lawsuit filed by the Federal Trade Commission (“FTC”) that we do not believe the FTC has statutory authority to bring, we argued:

“CoA is concerned that this case is part of an emerging pattern of ultra vires, unconstitutional FTC enforcement actions grounded in a fundamental error of statutory interpretation—specifically, the FTC’s apparent belief that it need not wait for Congress to pass legislation giving it permission to regulate broad swaths of the economy, so long as the FTC’s actions reflect its subjective vision of enlightened public policy—that not only flips basic administrative law on its head, but threatens the separation of powers vital to liberty.”

No agency can arrogate to itself legislative powers Article I of the Constitution reserves for Congress, no matter how important an agency thinks its policy aims might be.

Patrick Massari is Assistant Vice President at Cause of Action Institute

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