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LabMD v. FTC: A David Against Goliath Story

Free Lunch Podcast featuring Gus Hurwitz and Michael Daugherty
Justin (Gus) Hurwitz, Michael Daugherty, Devon Westhill July 19, 2017

Mike Daugherty was the CEO of LabMD, a medical testing lab. He has spent most of the last decade defending his company against charges that it had deficient cybersecurity practices. The early years of this battle are recorded in his book, "The Devil Inside the Beltway". In so doing, he has become the only litigant to challenge the basic authority that underlies more than 200 enforcement actions relating to cybersecurity and online privacy that the FTC has brought over the past 15 years. Every one of the 200+ litigants before him – including some of the largest companies in the world – have settled with the FTC, creating an unquestioned and untested belief that the FTC has broad authority to regulate in these areas.

Following oral arguments last month before a panel of the 11th Circuit Court of Appeals, it seems entirely possible that he will prevail. In so doing, he may well topple key pillars of the FTC’s cybersecurity and online privacy edifice.

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Featuring: 

  • Michael J. Daugherty, Founder, President and CEO, LabMD

  • Gus Hurwitz, Assistant Professor of Law, Nebraska College of Law

“Uber of the Sky”: The Story of Flytenow

Free Lunch Podcast featuring Jonathan Riches and Alan Guichard
Jonathan Riches, Alan Guichard, Devon Westhill July 17, 2017

Flytenow was a ridesharing platform for small planes. The company was founded by two pilots, Alan Guichard and Matt Voska. This kind of cost-sharing arrangement was explicitly authorized by the Federal Aviation Administration (FAA). The Flytenow software facilitated the cost-sharing in accordance with FAA rules and also provided a breadth of information about the flight and the pilot including his/her license type, experience, past flight ratings, and social media.

The service was a great win-win for both parties. That is until the FAA caught wind of all the innovation and deemed the online nature of Flytenow to be prohibited. The FAA reasoned that posting flight plans online, as opposed to physical bulletin boards, was impermissible because it could attract a broader segment of the public. Flytenow, with the help of The Goldwater Institute, challenged the FAA’s ruling all the way to the Supreme Court; but unfortunately, the Court declined to take up the case in January of this year, effectively upholding the lower courts' siding with the FAA.

Flytenow is now pursuing a legislative route to make ridesharing in aviation a reality. 

Speakers:

  • Jonathan Riches, Director of National Litigation, Goldwater Institute
  • Alan Guichard, CFO and Co-Founder, Flytenow, Inc.

Moderator:

  • Devon Westhill, Director, Regulatory Transparency Project

SEC Increased Use of Administrative Proceedings and “The $2,200 Man”

Free Lunch Podcast featuring Michael Kelly and Eric Wanger
Michael Kelly, Eric Wanger, Devon Westhill June 22, 2017

In many federal investigations, a regulatory agency must bring legal action against a company or individual through the traditional court system. However, some regulatory agencies, like the Securities and Exchange Commission (SEC), have a powerful alternative – administrative proceedings. Rather than filing a lawsuit in federal court, the SEC can institute an administrative proceeding, which is presided over by an Administrative Law Judge. In doing so, the SEC can put nearly any company or individual at a distinct litigation disadvantage, depriving them of significant rights and thereby increasing its own chances of success.

Take for instance, the case of Eric Wanger. In 2010, Mr. Wanger ran a multi-family office, employed 11 people, published articles on finance, and campaigned for shareholder rights. The SEC claimed that Mr. Wanger overcharged his clients by exactly $2,269, about $70 per month—possibly the smallest case the SEC has ever undertaken. No charges were ever filed against Mr. Wanger, and no hearings or trial were held. He never pleaded guilty or admitted to breaking any laws. The SEC instead, instituted administrative proceedings which forced Mr. Wanger to shut down his business and layoff his employees, and has since barred him from practicing his profession.

You can also read more about Mr. Wanger’s story on his blog at https://2200dollarman.org.

Speakers:

  • Michael Kelly, Hogan Lovells U.S. LLP
  • Eric Wanger, Founder, Wanger Investment Management

Moderator:

  • Devon Westhill, Director, Regulatory Transparency Project

Regulatory Transparency Project: What and Why?

Free Lunch Podcast featuring Amb. C. Boyden Gray and Project Director, Devon Westhill
C. Boyden Gray, Devon Westhill June 09, 2017

The Regulatory Transparency Project seeks to combat the excesses of the administrative state in this country. All too often, over-regulation of the economy stifles innovation, productivity, opportunity and ultimately, the American Dream. We want people to look at regulations which are burdensome and extremely inefficient and not simply submit to them as the cost of doing business but rather, look for real and concrete ways to change them for the better.

The RTP is a years-long endeavor designed to reach and to educate a broad audience. The purpose, in part, is to illustrate that regulatory excess is not a partisan issue but, a good government issue. We believe that such an approach can lead to both immediate change and, more importantly, development of a healthy societal skepticism of regulation.

Speakers:

  • Amb. C. Boyden Gray, Founding Partner, Boyden Gray & Associates
  • Devon Westhill, Director, Regulatory Transparency Project

Introduction to the Free Lunch Podcast

Featuring Project Director, Devon Westhill
Devon Westhill June 09, 2017

The Regulatory Transparency Project seeks to identify and raise awareness of the excesses of the administrative state in this country. All too often, over-regulation of the economy stifles innovation, productivity, opportunity and ultimately, the American Dream. We want people to look at regulations which are burdensome and extremely inefficient and not simply submit to them as the cost of doing business but, rather, look for real and concrete ways to change them for the better.  The RTP is a years-long endeavor designed to reach and to educate a broad audience. The purpose, in part, is to illustrate that regulatory excess is not a partisan issue but, a good government issue. We believe that such an approach can lead to both immediate change and, more importantly, development of a healthy societal skepticism of regulation.

Devon Westhill introduces and describes the Free Lunch podcast series, a production of the Federalist Society's Regulatory Transparency Project.

Speakers:

  • Devon Westhill, Director, Regulatory Transparency Project