c brought in on fairness action and we believe it should be dismissed for three reasons in brief forced as a matter of sad statutory interpretation whatever unfair trade practices means it cannot be stretched to me negligent behavior and clearly negligent or negligent emissions which allowed criminal activity to take place second in terms are fair notice point here what you had substantial consumer harm which i don't think is beyond the pleadings i think is not a matter for if i think that what that issue is one not only of twelve way but it actually goes to the entire statutory ability that was using it it had fire walls but it was using it it was keeping up with all commercially reasonable standards or they didn't send out but it was part of the website terms of service so when you click on the terms of service there is a there are multiple paragraphs on what we're doing and we have very specific statements us what we're doing the type of encryption technology we're using the types of sockets we're using and that's one of the reasons ron that i want to emphasize that deception point is now i'm not in front of a court but the ruling that we're advocating from the court would do nothing to limit the f t c these agenda on cyber security with respect to deception and so if a company says this is what we're going to do on cyber security and they don't live up to that we have no quarrel with that president obama's executive order of last year set for critical infrastructure such as power plants and banks those in this standards we're now apply and so i think we're moving in the right in the right direction and i think there are standards out there that an agency or the stakeholders could develop and i think i'm hopeful that we will get there because i think it would be it would be very useful the transaction cost today of trying to guess where the  part was was indicated and i mean there there were all these consent decrees and there were testimony before congress there were how can you say that you were not on notice and well with respect to the consent decrees the large majority of them prior to the winter break were deception which we talked about earlier sure there were five unfairness to be sure but even data security that's consistent with the standards and so in terms of what a federal law to get or potential let it get a look at rada when i district court judge would enter an order for example in this case they would never be able to enter an order  say you shall have reasonable data security measures they would have to detail because it's on pal to contempt what exactly you're on notice of and similarly just a record for for your question what were the companies on notice of the first unfairness decrees were roughly two years before the breach and there were five of them but all they said is reasonable data security and that's against the backdrop of every single every single federal court case  work because that is a very narrow issue of what the consumers were told and we believe that if you look at the website it's in the appendix in terms of the technology we were using that's why we that's why we didn't make that part of the at this point they can't even say that these were the likely cause and we know that because b consultants and the federal criminal authorities couldn't even identify the likely cause of the breach so it gets to the constraint on on the agency or are the costs imposed by this what happens in today's world is that a company like windham go through a two year investigation the f t c looks at over a million pages of documents and are they going to identify somebody that didn't change their password on time they surely are i would imagine every organization that would happen and then that but that shouldn't that can serve as the ability for the agency then to go forward because there's no constrain on the other side of that line our mission distinction but sheer again in terms of pleading what they pled is largely it a negligent omission case but that's not central to our argument i do think it raises concerns both a fairness and statutory authority when somebody is being the subject of a federal law enforcement action for negligent omissions that allowed criminal activity by a third party and again to properly applied pesticides to certain consumers the fourth circuit along the lines of every other federal court case that we have found and toping unfair trade practice says mere negligence is not enough and negligent omissions especially are not enough so you know i don't know if it's central to the issue but i think it certainly informs the issue and then when we get to that the statutory interpretation point aside from the policy issues amended to group strap the policy statement now the f t c would have the court the way that when congress enacted amendment that was in response to overreaching by the f t c the congress did eight the first part of the statutory language and in fact your honor in fact create a regime in which it's not only your negligence under the f t c as you but it's actually it's actually on have less hair maybe room more gray but they're going to have this issue of whether data security breaches you could one could be held liable for under strict liability standard and you see that in the f t c briefs they say once and only once during this amendment so how could they limit the authority and yet even live eight the first part of the statute and all the federal court decision a law applying what we would say is a declared the practice is unfair no i don't think it sent the crees count i don't think the two thousand and seven brochure counts and i don't think chevron deference applies so are we are they asking this federal court in the first instance believe me i know i'm here asking the court for various things and i'm telling my power part brian thirteen b because i don't think i should convince the court to create a circuit spread and i think the any alleged violation is fine chattering the agency has discretion between as a general matter as we said or not read but i think this thing gets into the notion of francis ford motor which is discussed by the nice circuits and there are limited circumstances that power to do and this court has looked at in the funeral directors cases now the f t c is response added just for quote was what takes a lot of time that may be true but that's part of administrative law is that we at the time it my thoughts are somewhat clearer since last week but in some ways we're in a world where we're now talking about claims about it because there could be no real dispute that the deception claims properly in federal court as judge  are questions and i said earlier on deception agenda this is protected by our position in this case and so that by a federal court understood deception and it's been hard for me analytically to sort whether the agency would then be a course to split their claims so that we have an agency proceeding and then a federal court proceeding i don't think that's the right answer either competing proceedings so i think getting back to the court's question of february twentieth the deception claims clearly here are thirteen big and then the question is if i were litigating to stay in federal court which i am i would make the arguments i've already made but i would also say you shouldn't just as a matter of  split out the unfairness claim to the agency as a since a federal court claim it's almost like a pending claim or supplemental jurisdiction and i know we're four feel now but there's no other way to reconcile the unfairness claim that includes discourse met right and which i think is another reason why i think the agency is here and i'm saying without the disco and all they could get was injunctive relief without disclosure then would that change my arguments on b yeah i don't think so your honor i'd want to think that through a little bit but i don't think so i think that it would make the thirteen b issue actually more more clear because then they would only be going to the court for a narrow application injunction consistent with the legislative history that's clearly what congress wanted that wanted the agency be able to go to federal court now here it's a little odd since it's been six or seven years after the breach and we've been in federal court two years and they haven't moved for an injunction and i think when they do move for an injunction they can't get an injunction so in some way yes it is a little head scratching your honor i think we all come at that like and the agency objected again and they don't want to tell us what exactly we would what the order would look like which i think yes our in some ways we're chasing our tail here because i don't know if they're ever going to move for an injunction but  that's a limit on remedies thirteen body as opposed to what i think they're here under thirteen thirty one thirteen thirty seven then and thirteen forty five original jurisdiction i think there's well the congress certainly interest of the f t c with defining the scope of unfairness a very broad word that congress is limited only once and so but what congress has also done is it's given the injunctive relief also includes equitable relief like rescission of contracts and restitution and you know equitable monetary remedies that the commission itself does not have the authority to award the commission itself under section five  cases like order versus water and the de mayo case record doesn't have a briefing on this of course but this is a fairly established body of law particularly in the courts of appeals and this court actually itself addressed this once and in unpublished opinion where it accepted as a general matter the theory that's been out widely adopted by other courts of appeals throughout the country reasons why the f t c might proceed in one venue rather than another venue but that also leads to the ongoing question can the f t c choose to have a case that makes new over the case for example which involves that check service it's a nice circuit decision and it involved a service where if you could write electronic  record presumably because there was a lot of potential restitution to help consumers get some of their money back on in cases like the craning cases these are referred to in footnote eleven of the f  and so it wasn't just you know kind of off hand pick them and so but if you read fifty three b run it refers to when the commission has reason to believe that any person partnership corporation cetera is violating or about to violate any provision of law enforced by the federal trade commission so beth suggests that section five which is a provision of law enforcement the federal trade carrier well run meat packer or an airline you know or want to but the concern i have it looks like when thirteen b was passed you have the senate report number ninety three one pretty one says quote the commission will have the and then i'll concede there are cases in the records have gone further but it looks like when you come back to the statute at least what to the extent one puts credence in legislative history that that intense jury that statement to the entire congress which you know some judges think you can some think you can and i don't think it's entirely fair to read that as a strict limitations on section  card bills that consumers couldn't reasonably avoid and that they wound up with out of pocket expenses so be it very very well spoken and administrative presuming you can find out whether they were all reimbursed as alleged  proceedings i think the court needs to take as as a given and those allegations are you know fundamental security failures lack of firewalls you know lack of encryption failure to update security systems  takes neat virtually boundless word unfair and puts some substantial balance on it and it has three factors first there has to be substantial harm to consumers second very hard has to be you know reasonably circle you can do well very start from the position that the word unfair is severely limited and that congress will repeat it even further i don't think that's a correct reading of the way the supreme court has interpreted unfair i don't think it's a correct reading of the dictionary definitions of unfair i think that unfair has been read by the supreme court it was actually intended by congress if you look at the legislative history from  case is is a case that involves a violation of any provision of law enforced by the federal trade commission that's consistent with the statute and it's the way courts of approach and as we were discussing earlier there may be some legislative history that touches on this issue but i don't think that that really limits the concept so when you look at five it it says that the commission issues a complaint it takes a vote on that complaint and there has to be a majority vote by the commissioners just to issue a complaint and including a thirteen b complaint in federal court and so i'm certainly unfair it speaks for itself and it has been interpreted by the commission for many many years to focus principly on consumer injury and then has those other factors in it too because of readability and if this is used to do that back wheel base but but still there was you know a majority vote it was you know it was duly voted on by by the commission and that doesn't make it any less about you know commission it official act and i would like to circle back judge robert to the underlying question here which is whether the f t c is actually there is a question one of the court's letter out has actually addressed some of the policy of some of the progressive era and new deal agencies the f c c has the same kind of thing and i'm sure other agencies do as well i think some of the you know health and safety agencies do or they have commissions acting he drew capacities but  the important point was that the lab and they were represented by the commissions policy making determination as a adjudicative body in that case the case was argued by the separated trial staff complaint counsel and interpretive matter we're reading our own statue bring your policy judgment to bear on these issues and the commission determined that at a failure to protect data security was contrary perhaps but nevertheless it does represent the commission's formal determination as an adjudicator voted on by the five commissioners that that it is an unfair each one of those complaints was published on the commission's website and in fact it was put out there the before the consent decrees entered the complaint and proposed to clear put out for public comment so this you a formal order of the commission taking of the policy position that the court seems to think is important here and the policy position is that this th and i think any careful general counsel would be looking at what the f t c is doing because either all manner of unfair practices the f t c has gotten involved in a vast array of different types of unfairness and practices and there are all kinds of you know complicated statutes that apply to almost everything corporations do particularly big corporations like wyndham and so you know if you're careful general counsel you don't pay attention to what the f t c is doing and you do look at these things keep in mind if you're going to notice judge and grow wait a bit self centered right on its web page we follow commercially reasonable practices we encrypt our data by a certain standard well at this point the allegations of the complaint are essentially no federal law at this the allegations of the complaint are you know passwords that didn't even pass the should the f t c meet the caught in this area or should we consider whether we want a comprehensive regulation not only martial business but of government agencies of nonprofit authority over acts commercial acts in interstate commerce and congress has not at this point except a few our areas like banking and and some credit card transactions and health care information congress has not spoken in the comprehensive way that you referred to to talk one of the difficulties of course is that this is one of the fastest changing areas of technology and it's exceedingly difficult to come up with specific standards effectively defines unfairness reasonable us and the kind of negligence like theories are incorporated into that cost benefit analysis that section five and incorporates into the  up hell a court on a other occur on a complaint but in front of a district court who will take evidence establishing the three factors that are relevant here and will be able to assess  failures were the very often the benefits to those writers that's the sort of by the way the district courts do every day take expert testimony they make decisions that doesn't require any specific policymaking judgment necessarily be factual determination and even f t c cases the f t c often brings in cases involving whether your advertisements for your dietary supplements are supported by scientific evidence and in for can be cases the commission frequently brings cases that say your studies don't support the claim made and the court will hear expert evidence from doctors and from scientists and they're debating the studies that do or cases like lab and d the commission has voted with the vote of all the commissioners over and over again to support the idea that a failure to have adequate data security is an unfair practice under the and at this point i think it's it begins to look more like you or your kind of typical run of the mill case then a novel application of the act the again the specifics may case in terms of what happened in terms of whether or not it was reasonable but again that's the sort of thing the district courts look at every single day of the week and they determine for that matter district courts look at normal statutes every day of the week and they which the court is asked about again that was a four zero decision as well one commissioner had already been recused goes to the point of why we don't want to be agency commissioner grow it already said publicly to say that while she had preordained a result discusses reliable sprinkler which is three twenty four f code at seven thirty three saying that the agency can change its mind this is only an administrative complaint they'll be policy making after words goes exactly to the panel's questions and now they're here saying oh well we've made a decision and we're entitle to deference whether it chevron deference or skidmore deference i don't think they could reconcile the two cases are fair notice pertain to they just his interpretation of its but if all the things that the agency does and i applaud their mission most of the time but actually the time and effort here would be well spent people are looking for a guy post to your question john a this does not change their deception theories they can still go after people for deception but judge roth they could say for the time being we're going to look at p c i standards and this standards and companies are on notice of that or to your question judge the the answer is no to your question have they ever published a reward regulation or interpretive guide and say people should look at our consent decrees and our two thousand and seven brochure the answer that question is no can't they give a publicly accessible statement as was done in the every health care so very health care i think illustrates a point i think it goes to also the whitman case when there is a narrow and not of gap filling you know words for the protection of workers and then the question is does travel expenses get paid for their further testing after they've been yet that's a pretty narrow gap to fill as opposed to here which is a large gap and again it's against think with all due respect comes close to ascertainable certainty and them or that case was with was the roof thirty feet or was a trough it was somebody on notice that was close enough here were that much different world i would like to you on if i can association because what's happening here and you all talk about this there's a lot of policy here besides statutory interpretation the costs are enormous our company but also the system has already taken care of the unfairness cost and why do i say that federal regulations say you were reimbursed at fifty dollars at the when that car brands however have head zero and so if we accept the f t c proposition that they are the agency charged with this and they develop an expertise they conducted a two year investigation and then they played around what all the courts across the country know that consumers have are paid are out of pocket zero on these breaches and that's a decision that the stakeholders have already made the banks the merchants the car brands that consumers pay zero and so there's a reason why they've played around that and so it we're we're spending all of this energy when the agency knows to this state they haven't identified a single person who lost a dollar and because the scheme is set up to do that as opposed to deception if somebody do this and they don't deliver they could be sued by the f t c but what is this you know addition is that there were over the course of two years six hundred thousand people that were their accounts out there was two point six million dollars worth of damages ok and they can't find a single person so it goes to even their notion of the statute that a substantial consumer hard when they haven't found anybody who lost a dollar and were here spending millions of dollars through an investigation that's that's of tools they have deception they have on fairness that is more than negligence and consumers have been following the debate on bayer and b m w in terms of a public on else as consumers here have lots of options if they were actually harmed and so i