In two cases filed within the space of a week, the Federal Trade Commission has kept the public from seeing complaints that have been filed on behalf of the American public. Only the Courts, the defendants, and the FTC can see the public's complaints, so far.
The first case is Federal Trade Commission v. U.S. Anesthesia Ptrs., Inc. (S.D. Tex. No. 4:23-cv-03560). Download Federal Trade Commission v. U.S. Anesthesia Ptrs. Inc. Complaint DE 1 filed Sept. 21 2023 (S.D. Tex. No. 4.23.cv.03560). In its 106-page complaint in that case, which the FTC filed on September 21, 2023, the FTC brought an antitrust lawsuit against a private equity firm for the first time.
The claims alleged in the complaint all come back to a central allegation that the private equity firm and its associated entities hiked the cost of reimbursement rates for anesthesia services in Texas through a conspiracy based on the acquisition of competitors. However, the allegation is repeatedly blacked out, i.e., redacted. See, e.g., id. at ¶ 91, p. 30; ¶ 107, p. 34; ¶ 111, p. 35; ¶ 115, p. 36; ¶ 118, p. 37; ¶ 128, p. 40; ¶ 133, p. 41; ¶ 140, p. 43; ¶ 148, p. 45; and many more.
We do not know why. I researched the Local Rules of the United States District Court for the Southern District of Texas where this case was filed, but I could find nothing to explain this.
I would show you the FTC's motion to seal portions of the complaint but I cannot. It's not available to the public, meaning you and me. It is available to the people's representatives, of course, meaning the FTC – the very party that sealed it from public view.
The FTC filed its motion to seal portions of the complaint "temporarily" but we cannot read the FTC's reasons for sealing any part of the complaint, or know what the FTC considers a "temporary" seal in that case. Incredibly, the FTC filed its motion to seal under seal.
I am going to send an E-Mail to the FTC attorney who signed the complaint, Kara Monahan, Esquire, one of eleven FTC attorneys listed on the complaint. I will let you know if I get a meaningful Reply.
In the meantime, we can perhaps find some enlightenment from another case that the FTC filed in September, this one against Amazon. (Or perhaps, not, as we shall see.)
In Federal Trade Commission v. Amazon.com, Inc. (W.D. Wash. No. 2:23-cv-01495-JHC), Download Federal Trade Commission v. Amazon.com Inc. Complaint DE 1 filed Sept. 26 2023 (W.D. Wash. No. 2.23-cv-01495) , the FTC alleged in a 172-page complaint it filed on September 26, 2023 that Amazon violated antitrust laws by favoring its own sales and putting up obstacles to competitors' sales on the Amazon website, in essence. Amazon runs what it calls a "marketplace," also known as a "fulfillment center," which includes products offered for sale by third parties.
The FTC alleged in pertinent part that Amazon violated antitrust laws by the use of a "Project Nessie," which Amazon describes on its website apparently as a monitoring system. However, once again we in the public do not know why "Nessie" allegedly offended antitrust laws. All or nearly all of the allegations of Amazon's antitrust liability based on Nessie are blacked out. Id., ¶ 417, p. 123 of 172, through ¶ 463, p. 132 of 172.
Even the amount of money that the FTC alleged that "Amazon's Project Nessie has already extracted ... from American households" is blacked out from public viewing. The likely first example of this blackout is in id., ¶ 4, pp. 5-6 of 172.
The FTC blames Amazon for its redactions. Plaintiff's Motion for Leave to Temporarily Seal Portions of the Complaint, DE 2 at 2, 3-4, filed Sept. 26, 2023 (W.D. Wash. No. 2:23-cv-01495-JHC). Download Federal Trade Commission v. Amazon.com Inc. Motion for Leave to Temporarily Seal Portions of the Complaint DE 2 filed Sept. 26 2023 (W.D. Wash. No. 2.23-cv-01495).
The FTC helpfully highlighted the hidden complaint with the allegations Amazon contended before suit would be "confidential," id. at 4, but we cannot see it. The hidden complaint is, well, hidden.
The FTC helpfully also filed a public version of its complaint which, as we have already seen, is heavily redacted. "Plaintiffs have filed a public version of the Complaint that redacts all information designated as confidential by the producing parties." Id. at 4.
That raises the issue of why the FTC filed its request to seal parts of the complaint at all. The FTC said this: "The FTC makes this request to comply with its regulations governing treatment of confidential information submitted to the FTC during its pre-complaint investigation and to give affected parties an opportunity to ask the Court to seal portions of the Complaint on a permanent basis. The FTC is not claiming confidentiality with respect to any information that is the subject of this Motion." Id. at 1-2. [Emphasis added.] The FTC also wrote that its request to seal was based on a "federal statute and FTC rules." Id. at 3-4. [Emphasis added.]
In sum, the FTC motion to seal is expressly filed "pursuant to" regulations, a federal statute, and rules. The FTC motion did not identify which regulations, statutes, or rules that the FTC had in mind when it filed this motion.
I am going to E-Mail the FTC lawyer, once again, in this case the FTC lawyer that signed this motion, Susan A. Musser, Esquire. She is one of seventeen FTC lawyers on the complaint, in addition to dozens of lawyers representing multiple States. Once again, I will let you know if I get a meaningful Reply.
Parenthetically, the FTC asked once again for a "temporary" seal, in this case, for "14 days." The FTC is supposed to represent the people, but in this case the FTC is keeping secrets from the public including how much Amazon allegedly bilked them. That amount is something that the FTC is going to have to put in evidence anyway.
For its part, Amazon's general counsel, David Zapolsky, Esquire, said in a statement that the FTC complaint is wrong on the facts and on the law. That may be, or maybe not. We simply cannot evaluate such comments if we the public cannot even read the complaint.
The Local Rules of the Western District of Washington are clear, however. Here is a link to the Local Civil Rules from the Court's website so that you can read the Rules yourself. Local Civil Rule 5(g) begins with this sentence: "There is a strong presumption of public access to the court's files." There are "only two circumstances" when a party may file a document under seal in a lawsuit in the Western District of Washington: one is if "a statute, rule, or prior court order expressly authorizes" it, and the other is by filing a motion in compliance with LCR 5(g)(2)(B) & LCR 5(g)(3).
We have already looked together, you and I, for a regulation, statute, or rule that expressly authorizes filing a partly-blacked-out FTC complaint, but we have not found any. (As of this writing, no court orders authorizing secrecy have been entered in either case.)
As for FTC's motion to seal, you have the opportunity to do what the Court in Washington and perhaps Amazon is going to have to do, and that is compare the motion to the Local Civil Rules to see how closely the FTC motion followed the Rules.
"Only in rare circumstances should a party file a motion, opposition, or reply under seal." LCR 5(g)(5). Apparently, the amount and at least one of the methods by which Amazon allegedly gouged its customers and third-party vendors alike is one of those rare circumstances in the eyes of the Federal Trade Commission.
As I said earlier, if I receive meaningful Replies to my E-Mails I will let you know. These and similar blackouts of all or parts of a complaint's allegations have ramifications for insurer bad faith cases. TO BE ADDRESSED IN AN ARTICLE TO FOLLOW ....
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