94°F
weather icon Cloudy

The biggest takeaways from MGM Resorts’ lawsuit against FTC

MGM Resorts International’s lawsuit filed Monday in Washington, D.C., against the Federal Trade Commission claims the agency that enforces antitrust laws and protects American consumers from fraud overstepped its authority, violated its own conflict-of-interest rules and deprived MGM of its Fifth Amendment rights.

The FTC is investigating MGM because of a cyberattack that impacted thousands of guests and customers in September. FTC Chair Lina Khan happened to check into an MGM property in Las Vegas as the cyberattack was unfolding.

In its investigation, the FTC is seeking a civil investigative demand, which allows the agency to request an extraordinary amount of information, spanning years, from MGM.

Here are some key takeaways from the filing made in the U.S. District Court for the District of Columbia:

- “The Due Process Clause of the Fifth Amendment affords parties subject to government enforcement actions a fair hearing before an impartial tribunal and guarantees them equal treatment under the law. MGM brings this case to challenge actions by the FTC and its Chair and FTC regulations that have deprived, and continue to deprive, MGM of these fundamental rights,” the lawsuit states. “This constitutional challenge has its roots in a widely publicized cyberattack against MGM in early September 2023. As was widely reported at the time, the cyberattack forced MGM to temporarily run its business — which sprawls across dozens of properties in the United States and abroad and serves millions of customers — without the use of the IT systems that help make its casinos and resorts best-in-class.”

- “The requests for information posed by the CID also closely track the precise events involving Chair Khan, with certain requests seemingly derived directly from her personal experience in transacting business with MGM during the attack.”

- “FTC’s purported legal justification for the CID is two financial services regulations, both of which are facially inapplicable to MGM. On this basis, and a catchall invocation of Section 5 of the FTC Act, the FTC seeks to compel MGM to produce more than 100 categories of information.” MGM says in its lawsuit that the FTC has never attempted to enforce the “Safeguards Rule” and the “Red Flags Rule” against a casino-resort operator like MGM.

- Khan’s refusal to recuse and the commission’s refusal to disqualify her, despite her personal involvement in the subject matter of the investigation, flies in the face of applicable case law and deprives MGM of its rights under the Fifth Amendment, the lawsuit says.

- Those problems are compounded because, contrary to the FTC’s own rules and internal policy, Khan participated in the commission’s decision about whether to disqualify her, according to the filing.

- “They were compounded further by the commission’s imposition of a patently impracticable 11-day deadline for MGM to comply with the massive civil investigative demand (CID) following denial of its petitions. Such a plainly unreasonable deadline has the effect of punishing MGM and chilling the exercise of the FTC’s administrative procedures to challenge CIDs.”

- The lawsuit said the pattern of unconstitutional conduct also affects the underlying CID. “The FTC’s investitive authority is not limitless. It may only conduct investigations pursuant to specific statutory grants of authority. As alleged below, however, the CID to MGM was premised in large part on facially inapplicable rules without any attempt to delineate which portions of the CID relate to which purported sources of authority.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.

Don't miss the big stories. Like us on Facebook.
THE LATEST