Federal Trade Commission v. Amazon.com Inc

District Court, W.D. Washington·Decided August 22, 2024·No. 2:23-cv-00932·Unknown

Opinion

1 2 3

4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 FEDERAL TRADE COMMISSION, CASE NO. 2:23-cv-00932-JHC 8

ORDER 9 Plaintiff, 10 v. 11 AMAZON.COM, INC; NEIL LINDSAY, individually and as an officer of 12 Amazon.com, Inc.; RUSSELL GRANDINETTI, individually and as an 13 officer of Amazon.com, Inc.; JAMIL GHANI, individually and as an officer of 14 Amazon.com, Inc.,

15 Defendants. 16

17 I 18 INTRODUCTION 19 This matter comes before the Court on Defendants’ Motion to Compel Production of 20 FTC Communications and Internal Documents. Dkt. # 146. The Court has considered: the 21 materials filed in support of, and in opposition to, the motion; pertinent portions of the record; 22 and the applicable law. Being fully advised, the Court DENIES the motion. 23 24 1 II BACKGROUND 2 The FTC brought this case against Amazon and three Amazon executives, alleging that 3 certain Amazon Prime sign up and cancellation methods violated Section 4 of the Restore Online 4 Shoppers’ Confidence Act (ROSCA), 15 U.S.C. § 8403, and Section 5(a) of the Federal Trade 5 Commission Act (FTC Act), 15 U.S.C. § 45(a). During discovery, the FTC declined to produce 6 certain internal documents as not relevant and privileged. Dkt. # 147 at 2. Defendants seek four 7 categories of documents: 8 9 (1) “Internal FTC documents reflecting the FTC’s interpretation over time of ROSCA, 10 negative options, and ‘dark patterns.’” Dkt. # 146 at 6. 11 (2) “Documents post-dating June 21, 2023 (the date the FTC filed its complaint) that 12 relate to the FTC’s ongoing negative option rulemaking.” Id. (citing 88 Fed. Reg. 24716). 13 (3) “Documents relating to the FTC’s 2009 report titled, ‘Negative Options – A Report 14 by the staff of the FTC’s Division of Enforcement’ and the related workshop discussed in the 15 report.” Id. 16 17 (4) “Documents in the custody of the FTC’s Office of Public Affairs (‘OPA’), including 18 documents relating to the FTC’s press releases about this litigation.” Id. 19 In the negotiations leading up to the motion, the FTC agreed to produce “all non- 20 privileged documents relating to the FTC’s investigation; final versions of FTC guidance, 21 publications, policy statements, and workshops related to dark patterns, negative options, or 22 ROSCA; and any non-privileged FTC ‘internal guidelines or policies for enforcing or 23 prosecuting the use of Dark Patterns or violations of ROSCA or any rule concerning Negative 24 1 Options.’” Dkt. # 148 at 5 (citing Dkt. #147-2 at 6). Also, the FTC has produced “non- 2 privileged communications between the FTC and third parties and non-privileged FTC internal 3 documents concerning any final decision as to what guidance FTC staff may provide third

4 parties.” Id. at 6 (citing Dkt. #147-4 at 6–7). The FTC declined to search for or produce the 5 remaining documents. Dkt. # 147-4 at 8. Defendants now seek to compel production of these 6 documents. Dkt. # 146 at 5. Defendants say that these documents are relevant to their defenses 7 that: 8 • ROSCA is a narrow statute that does not prohibit the legitimate marketing practices described in the FTC’s Complaint (Dkt. 84 at 9; Dkt. 83 at 11- 9 12);

10 • The Prime flows do not violate ROSCA (Dkt. 84 at 13-27);

11 • The FTC’s “dark patterns” allegations are unconstitutionally vague (Dkt. 84 at 28-31); 12

• The FTC has not provided “fair notice” of the novel statutory 13 interpretations it is attempting to enforce in this case (Dkt. 84 at 31-34; Dkt. 83 at 18-21); and 14

• Civil penalties are unavailable because Defendants lacked “actual 15 knowledge” of illegality (Dkt. 84 at 34-35; Dkt. 83 at 21-24).

16 Dkt. # 146 at 6. After the parties submitting briefing on the motion to compel, the Court 17 addressed these defenses in its Order denying Defendants’ Motions to Dismiss. Dkt. # 165. 18 III 19 LEGAL STANDARDS 20 Federal Rule of Civil Procedure 26 governs discovery. “Parties may obtain discovery 21 regarding any nonprivileged matter that is relevant to any party’s claim or defense.” Fed. R. Civ. 22 P. 26 (b)(1). Evidence is relevant if “it has any tendency to make a fact more or less probable 23 than it would be without the evidence, and the fact is of consequence in determining the action.” 24 Fed. R. Evid. 401. “The relevance standard is commonly recognized as one that is necessarily 1 broad in scope in order ‘to encompass any matter that bears on, or that reasonably could lead to 2 other matter that could bear on, any issue that is or may be in the case.’” Doherty v. Comenity 3 Cap. Bank & Comenity Bank, No. 16CV1321-H-BGS, 2017 WL 1885677, at *2 (S.D. Cal. May

4 9, 2017) (quoting Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978)). 5 “The court has broad discretion in determining relevancy for discovery purposes.” Doe 6 v. Trump, 329 F.R.D. 262, 270 (W.D. Wash. 2018) (citing Surfvivor Media, Inc. v. Survivor 7 Prods., 406 F.3d 625, 635 (9th Cir. 2005)). The party who seeks to compel discovery bears the 8 burden of establishing relevance. Mi Familia Vota v. Hobbs, 343 F.R.D. 71, 81 (D. Ariz. 2022); 9 Doe, 329 F.R.D. at 270–71. A “minimal showing” is required to demonstrate relevance. O. L. v. 10 City of El Monte, No. 220CV00797RGKJDE, 2021 WL 926392, at *2 (C.D. Cal. Feb. 1, 2021). 11 IV DISCUSSION 12 A. Internal FTC Documents that Reflect the Agency’s Interpretation of ROSCA 13 14 As to documents related to the FTC’s internal discussions regarding its interpretation of 15 ROSCA, the FTC objects on the grounds of relevance, attorney-client privilege, and deliberative 16 process privilege. Dkt. # 148 at 7. 17 Defendants say that the documents are relevant to its defenses for three reasons. Dkt. # 18 146 at 9. First, they say that the FTC’s internal discussions about ROSCA “illuminate the 19 standards alleged to have been violated.” Id. Second, they say that the documents are relevant to 20 the “actual knowledge” of illegality standard required for civil penalties; and thus that they “are 21 [] entitled to discovery of documents indicating that there is ‘more than one reasonable 22 interpretation’ of ROSCA’s requirements.” Id. And third, they say that the documents are 23 relevant to their “fair notice” defense, which “requires an objective inquiry that turns on whether 24 a ‘person of ordinary intelligence’ would know what the law prohibits.” Id. (quoting United 1 States v. AMC Ent., Inc., 549 F.3d 760, 768 (9th Cir. 2008)). Defendants contend that 2 “documents reflecting uncertainty about what ROSCA means (or differing interpretations of 3 ROSCA) within the FTC—the very agency charged with enforcing the statute” are relevant to

4 this defense. Id. (emphasis in original). 5 1. Interpretation of ROSCA 6 Defendants say that the FTC’s internal discussions about ROSCA are relevant to 7 “illuminate the standards alleged to have been violated.” Dkt. # 146 at 9. The FTC responds 8 that internal agency discussions of the agency’s interpretation of a statute “are irrelevant to 9 questions of statutory interpretation.” Dkt. # 148 at 8. The Court agrees with the FTC. The 10 FTC’s internal discussions about the meaning of ROSCA are not relevant to whether ROSCA 11 proscribes Defendants’ conduct. Cf.

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