State & Federal Officials Increasingly Seek Policy Change Through Litigation Instead Of Legislation

Someone at the IRS criminally leaked confidential taxpayer information more than once in recent years and no one has been fired or reprimanded as a result. In June, the California Department of Justice that Vice President Kamala Harris once led was forced to admit that the state agency with an annual budget exceeding one billion dollars accidentally exposed private personal information of hundreds of thousands of gun owners who reside in the Golden State. TikTok is sharing data on millions of Americans with Chinese government officials. While these data privacy breaches and concerns remain unresolved, taxpayer resources are now being used to advance a government lawsuit intended not to address an actual data breach or violation of the law, but due to the alleged potential for privacy violations. The lawsuit in question was filed by the Federal Trade Commission on August 29 against Kochava, an ad tech business.

The FTC’s lawsuit alleges the data broker sold information that could allow a person’s location to be tracked back to sensitive locations. Yet, as some legal experts have pointed out, other companies do the exact same thing as Kochava and are not being targeted by the FTC. Critics of the lawsuit contend the FTC’s complaint against Kochava is rooted in fundamental opposition to ad tech industry as it currently operates. In its complaint, the FTC explains its reasons for suing Kochava:

“The company’s data allows purchasers to track people at sensitive locations that could reveal information about their personal health decisions, religious beliefs, and steps they are taking to protect themselves from abusers. The release of this data could expose them to stigma, discrimination, physical violence, emotional distress, and other harms.”

It’s important to note the FTC’s complaint alleges Kochava’s data “could reveal” sensitive information or “could expose” someone to stigma, not that it has actually done either of those things. In fact, the FTC doesn’t document any such instances of inappropriate data exposure, let alone exposure leading to harassment. With this lawsuit, its critics see the modern day FTC seeking to become the real-life version of something akin to the pre-crime division in Minority Report, the 2002 hit movie staring Tom Cruise.

Interestingly, FTC commissioners have admitted that the lawsuit against Kochava was brought for the purpose of setting precedent. Or, as some will see it, FTC officials have confirmed they filed this complaint against Kochava as part of a larger effort to set policy through litigation as opposed to legislation. Many on Capitol Hill will likely take issue with what is seen as an effort by the FTC to usurp congressional authority.

In anticipation of the FTC’s action, Kochava filed a lawsuit of its own on August 18, asking a federal court to step in and stop what the company argues is an instance of unlawful bureaucratic overreach. Kochava and others make the case the FTC is seeking to set regulations for the ad tech industry through adjudication instead of the proper vehicle for making such economically significant policy decisions, which is legislation.

State Officials Also Seek To Set Policy Without Input From Democratically Elected Lawmakers

This FTC lawsuit is part of a broader trend occurring at both the federal and state levels of government, in which there has been a growing push to make laws and set economically significant policy through the courts instead of the legislature. In multiple states, judges are being pushed, not just by activists but also by powerful government officials, to enact sweeping reforms, many of which have already been proposed in the legislature and failed to receive support from a majority of elected representatives.

Today many of the same politicians who bemoan threats to democracy are calling on the courts to overrule the judgement and authority of legislators who are directly elected by and accountable to voters. Take North Carolina, where Governor Roy Cooper (D) is pushing for his state Supreme Court to dictate and authorize state appropriations even though the North Carolina Constitution states that such budget decisions are under the purview of the General Assembly.

Education spending isn’t the only area where Governor Cooper and progressive Democrats are seeking to set policy through the courts. Cooper is supporting a lawsuit brought by the NAACP that seeks to overturn two constitutional amendments approved by a majority of North Carolina voters in the 2018 general election.

“Democratic activists didn’t like how the people voted on the tax cap and photo ID. So they sued,” John Hood, a board member at the John Locke Foundation, explained in a recent article. “Democratic justices on the North Carolina Supreme Court didn’t like how the people voted, either. So they sided with the plaintiffs and, in effect, threw out the two amendments (though the final shoe, a trial court determination, likely won’t drop until after the 2022 election).”

Progressive groups have successfully pressured politicians like Roy Cooper and Cheri Beasely, the Democratic nominee for open U.S. Senate seat in North Carolina, to support efforts to make major policy decisions through litigation rather than legislation. Meanwhile critics of the FTC lawsuit against Kochava argue it is, in part, an attempt by the Biden administration to assuage progressive concerns following the June U.S. Supreme Court ruling in the Dobbs case.

“Democrats have grown increasingly worried about securing consumers’ privacy in terms of their reproductive health choices,” the Los Angeles Times reported on September 6, adding that a bill introduced in the California Assembly by Rep. Sara Jacobs (D-San Diego) “would limit how much information personal health applications can collect, retain and disclose.”

At the federal level, Congressman Frank Pallone (D-N.J.) has introduced legislation seeking to address data privacy concerns. That bill, the American Data Privacy and Protection Act, would regulate the manner in which tech companies are allowed to store, share, or sell consumer data. After easily passing out of committee in July, the bill has since stalled due to opposition from California Governor Gavin Newsom (D) and others who don’t like how the bill preempts the Golden State’s more stringent state regulations for tech company usage of consumer data.

The FTC’s lawsuit against Kochava is widely viewed as an effort to circumvent Pallone’s bill and bypass the work being done in Congress to set federal rules that protect data privacy. While the FTC proceeds with its case against Kochava, the Idaho-based company has made clear it will fight this lawsuit tooth and nail.

“I encourage everyone to actually read the FTC’s lawsuit,” Charles Manning, CEO of Kochava, wrote in an open letter published on September 1. “You’ll see it is entirely based on hypothetical scenarios, there are no references to any actual instances where Kochava sold data to reveal visits to sensitive locations – certainly not sensitive health locations like women’s health clinics. The FTC cannot point to specific instances because it simply doesn’t happen.”

Some see this case as another instance, like with immigration, in which people in Washington appear more interested in the issue than the solution. Manning went on to explain in his letter why he believes the FTC’s complaint lacks merit and ignores how the company is already voluntarily working to address privacy concerns.

“Innovation is often ahead of regulators, as is the case in this space,” Manning wrote. “In order to avoid sensitive location data from being available in the data marketplace, the FTC could provide specific locations to data providers to actively block. They have yet to do that. In the meantime, the industry is doing just that with Kochava leading the charge.”

The FTC’s lawsuit, if successful, would certainly set a precedent, though not strictly the one intended. The cost of federal regulations, projected at $1.9 trillion annually as of 2021, is now greater than combined federal personal and corporate income tax payments. By setting economically significant policies and even spending levels through litigation as opposed to legislation passed by democratically elected lawmakers, as Governor Roy Cooper and the Biden FTC are advocating, the present costs of government spending and regulation, which are at historic highs, will become even harder for future generations to afford. Those who think government has grown too costly as it is are unlikely to be pleased with what happens after more cost-driving policies are set by people who are unaccountable to voters.