United States v. Facebook, Inc.

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UNITED STATES OF AMERICA, Plaintiff, v. FACEBOOK, INC., Defendant.

Civil Action No. 19-2184 (TJK)

United States District Court, District of Columbia

November 27, 2023

MEMORANDUM OPINION

TIMOTHY J. KELLY, UNITED STATES DISTRICT JUDGE

In July 2012, the Federal Trade Commission and Defendant Facebook Inc.-now known as Meta Platforms, Inc.-resolved an administrative proceeding over Defendant's alleged unfair and deceptive business practices relating to user privacy through the FTC's entry of an administrative decision and order. Among other things, the 2012 administrative order mandated that Defendant maintain a comprehensive privacy program. In July 2019, the FTC accused Defendant of violating the administrative order and committing related violations of law, and the Department of Justice filed this suit to seek civil penalties and injunctive relief. In April 2020, the Court entered the parties' Stipulated Order that imposed $5 billion in civil penalties against Defendant and directed Defendant to consent to the FTC's reopening of its administrative proceedings to modify the 2012 administrative order. The FTC did so soon after. Under the Stipulated Order the Court retained jurisdiction for purposes of the Stipulated Order's construction, modification, and enforcement.

Earlier this year, however, the FTC ordered Defendant to show cause why the 2020 administrative order should not be modified because of Defendant's additional alleged violations of the 2012 administrative order, violations of the 2020 administrative order, and related alleged violations of law. In response, Defendant moves to enforce the Stipulated Order and enjoin the FTC from reopening the administrative proceedings against it on both a preliminary and permanent basis.

For the reasons explained below, the Court finds that the obligations imposed on Defendant through the FTC's 2020 administrative order, although set forth in an attachment to the Stipulated Order, were not made part of the Stipulated Order itself. As a result, the Court lacks jurisdiction over claims related to potential changes to the 2020 administrative order and the FTC's authority to reopen its proceedings and modify that order, because those claims do not involve the construction, modification or enforcement of the Stipulated Order. Moreover, Defendant's remaining claim that the FTC might make a small change to the 2020 administrative order that is inconsistent with the Stipulated Order does not warrant preliminary injunctive relief. Thus, as explained below, Defendant's motion will be denied.

I. Background

In 2011, the FTC filed an administrative complaint against Defendant, alleging “unfair and deceptive” privacy practices in violation of the FTC Act, 15 U.S.C. § 45(a). See In the Matter of Facebook, Inc., No. C-4365, 2012 WL 3518628 (F.T.C.) (July 27, 2012) (“2012 Action”). As part of the settlement of that action, in July 2012 the FTC entered an administrative order requiring, among other things, that Defendant maintain a comprehensive privacy program. ECF No. 3 (“Compl”) ¶¶ 28-33; 2012 Action.

In July 2019, the FTC accused Defendant of violating the 2012 administrative order and committing related violations of the FTC Act, and the DOJ filed this suit to seek civil penalties and injunctive relief. Compl. ¶¶ 1, 43-48, 155-90. In April 2020, the Court entered the Stipulated Order the parties proposed to resolve the suit. The Stipulated Order imposed $5 billion in civil penalties against Defendant. ECF No. 4-1 at 3. It also ordered Defendant to “consent to:

(i) reopening of the proceeding in FTC Docket No. C-4365; (ii) waiver of its rights under the show cause procedures set forth in Section 3.72(b) of the Commission's Rules of Practice, 16 C.F.R. § 3.72(b); and (iii) modifying the Decision and Order in In re Facebook, Inc., C-4365, 2012 FTC LEXIS 135 (F.T.C. July 27, 2012), with the Decision and Order set forth in Attachment A.” Id. at 4. Attachment A to the Stipulated Order was a proposed administrative order that, once adopted by the FTC, would replace the 2012 administrative order. Id. at 9-30. The Court reviewed the terms of the parties' proposal and found that the parties had consented to it and that it was fair, reasonable, and in the public interest. ECF No. 34 at 8-17. Thus, in April 2020, the Court entered the Stipulated Order and closed the case. ECF No. 35. The Stipulated Order provided that the Court would “retain jurisdiction in this matter for purposes of construction, modification, and enforcement of this Stipulated Order.” Id. at 5.

Not long afterward, the FTC issued an order summarizing the proceedings here and “determined that it is in the public interest to reopen the proceeding . . . pursuant to Commission Rule 3.72(b), 16 C.F.R. § 3.72(b), and to issue a new order.” ECF No. 38-11 at 2. Thus, the FTC reopened its administrative proceedings and modified the 2012 administrative order by replacing it with Attachment A, which then became the 2020 administrative order. Id. at 2-24. Two of the five FTC commissioners dissented from the FTC's decision to issue the 2020 administrative order. Id. at 2.

About three years passed. Then in May 2023, the FTC invoked its reopening authority under 15 U.S.C. § 45(b) and issued an order directing Defendant to show cause why the 2020 administrative order should not be modified because of additional alleged violations by Defendant of the 2012 administrative order, violations of the 2020 administrative order, and related alleged violations of the FTC Act. ECF No. 38-4. The show-cause order proposed far-reaching modifications to the 2020 administrative order that the FTC says are intended to “strengthen and enhance” the order's protections. Id. at 13. For example, the proposed modifications include new provisions (1) limiting Defendant's use of information collected from minors, (2) prohibiting Defendant from introducing any new products or features pending its privacy program coming into full compliance with the order, and (3) extending the application of the order's existing provisions to Defendant's use of facial recognition technology. Id. at 13-14. The FTC directed Defendant to respond within 30 days and said it would “first consider [Defendant's] Answer and then determine what process is appropriate to resolve any issues that arise from that Answer, ” and eventually “determine whether to make the [proposed modification] final or modify it in any way.” Id. at 2.

Rather than answer the FTC's show-cause order, though, Defendant moved this Court to enforce the Stipulated Order and enjoin the FTC from reopening administrative proceedings against it on both a preliminary and permanent basis. ECF No. 38. The FTC extended Defendant's deadline to answer to allow the Court to consider the motion. ECF No. 53 at 32.

Defendant's argument is three-fold. First, it argues, because this Court retains exclusive jurisdiction over the Stipulated Order “for purposes of [its] construction, modification, and enforcement, ” the FTC cannot modify the 2020 administrative order through its proposed administrative proceedings. ECF No. 38-1 at 25-29. And, it says, the Stipulated Order is a “final judgment” which can only be modified under Rule 60 of the Federal Rules of Civil Procedure, and for the FTC to modify the Stipulated Order on its own would both exceed its reopening authority under Section 5(b) and violate Article III. Id. at 29-36. Second, because the FTC's proposal is unmoored from the 2020 administrative order, the scope of such a modification would, likewise, exceed the FTC's statutory and regulatory authority to “alter, modify, or set aside” its orders. Id. at 36-41; see also 15 U.S.C. § 45(b); 16 C.F.R. 3.72(b). Third, Defendant brings a series of constitutional challenges to both the structure of the FTC and its exercise of its reopening authority in this case. Id. at 41-53. In light of these claims, Defendant seeks a preliminary injunction under the All Writs Act which it says does not require a showing of irreparable harm. Id. at 53. In the alternative, it also argues that there would be irreparable harm should it have to participate in an unconstitutional administrative proceeding. Id. at 53-54.

II. Legal Standards

Federal courts are courts of limited jurisdiction. See Gen. Motors Corp. v. EPA, 363 F.3d 442, 448 (D.C. Cir. 2004) (“As a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction.”). The law presumes that “a cause lies outside [the Court's] limited jurisdiction” unless the party asserting jurisdiction establishes otherwise. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Federal courts, accordingly, have an “independent obligation to ensure that they do not exceed the scope of their jurisdiction” and “must raise and decide jurisdictional questions that the parties either overlook or elect not to press.” Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011). District courts have “original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Congress, however, has implicitly divested district courts of that jurisdiction when a party seeks review of an order of the FTC, 15 U.S.C. § 45, except where claims are not “of the type” the statutory review scheme reaches, such as “claims that the structure, or even existence, of an agency violates the Constitution, ” Axon Enter., Inc. v. FTC, 598 U.S. 175, 188-96 (2023).

A preliminary injunction is “an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter v. Nat. Res Def. Council, Inc., 555 U.S. 7, 22 (2008). The movant must establish that “he is likely to succeed...