Antitrust Law Daily Wrap Up, PRIVACY NEWS: Third Circuit takes Wyndham's appeal in FTC action, (Jul 31, 2014)

By Jeffrey May, J.D.

The U.S. Court of Appeals in Philadelphia has agreed to hear a challenge by Wyndham Hotels and Resorts, LLC to an FTC action over the hotel group's data security practices. On Tuesday, the court granted Wyndham's petition for an interlocutory appeal of a district court order denying a motion to dismiss (FTC v. Wyndham Worldwide Corp., No. 14-8091).

In April, the federal district court in Newark denied Wyndham's motion to dismiss the FTC's suit against the hotel group for failing to implement reasonable data security measures to protect consumer information following two data breaches in violation of Section 5 of the FTC Act. The court held that the FTC not only had the authority to bring an unfairness claim involving data security, but that it also had adequately pleaded its unfairness and deception claims. Further, the court rejected contentions that the agency was required to formally promulgate regulations before bringing an unfairness claim under Section 5 to satisfy fair notice principles.

In light of the important issues involved, the district court in June allowed Wyndham to seek an immediate appeal. Wyndham questions the FTC’s authority to bring an unfairness claim based on data security breaches and the agency’s ability to pursue an action for unfairness without having issued regulations in the area.

Attorneys: Allison Michelle Lefrak for FTC. Jennifer A. Hradil (Gibbons, PC) for Wyndham Worldwide Corp., Wyndham Hotel Group LLC, Wyndham Hotels and Resorts, LLC, and Wyndham Hotel Management Inc.

Companies: Wyndham Hotels and Resorts, LLC; Wyndham Worldwide Corp.; Wyndham Hotel Management Inc.

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