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Wyndham Gets Life Preserver in Data Breach Case

New Jersey U.S. District Judge Esther Salas agreed to allow Wyndham Hotels and Resorts LLC to immediately appeal to the Third Circuit a ruling affirming the FTC’s authority to bring data security cases.  We have been following this case since the beginning, and you can see our last post here.

Judge Salas noted that businesses and consumers nationwide would benefit from appellate review of the issues.  In granting Wyndham’s motion for interlocutory review of her order refusing to dismiss the case, she certified to the Third Circuit the following two questions:

  1. Whether the Federal Trade Commission can bring an unfairness claim involving data security under Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a); and

  2. Whether the Federal Trade Commission must formally promulgate regulations before bringing its unfairness claim under Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45(a).

While recognizing that interlocutory certification should be used sparingly, Judge Salas noted that the circumstances here appear sufficiently exceptional to justify certification for interlocutory appellate review.  She further acknowledged “the nationwide significance of the issues in the action, which indisputably affect consumers and businesses in a climate where we collectively struggle to maintain privacy while enjoying the benefits of the digital age.”

With this latest development, Judge Salas has thrown Wyndham a life vest and allowed it to fight another day on these high stakes questions surrounding the FTC’s authority.  The implications of a Third Circuit ruling in Wyndham’s favor cannot be understated, and could have the potential to prompt quick action by Congress to establish the FTC’s authority.

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume IV, Number 178
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About this Author

The frictionless flow of information is a defining feature of today’s information economy. Your organization’s ability to transfer customer data, employee files, financial records, and other information around the country or the globe quickly and cheaply has opened a world of new opportunities. Privacy laws vary by jurisdiction and are interpreted unpredictably, and even if your business is extremely conscientious, it can make a false step as it captures, uses, transfers, and discloses personal information. The consequences can be serious and even devastating — heavy...

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