After the Federal Trade Commission (FTC) and its Chairwoman Lina M. Khan filed a request for a civil investigation of the recent cyberattack experienced by MGM Resorts International, the Las Vegas-based corporation has reportedly responded with a lawsuit against the commission and its top executive. As reported by the Las Vegas Review-Journal, MGM claims that the presence of Lina M. Khan in the resort during the September 2023 cyberattack shall reclude her from the proceedings. The lawsuit also claims that the FTC’s denial to follow the respective MGM’s petitions represents a violation of the company’s rights under the Fifth Amendment.
Civil Investigation Demand:
As reported, the company filed a lawsuit in the U.S. District Court for the District of Columbia seeking to stop the civil investigation demand (CID) filed by the Federal Trade Commission on 25 January 2024. Otherwise, Khan’s recusal from the matter is sought on conflict-of-interest allegations against the FTC. According to MGM Resorts, the agency’s CID allows federal agencies to avoid judicial procedures to request extensive amounts of information from private companies, as Las Vegas Review-Journal (LVRJ) reports.
Chairman Recusal Sought:
The conflict-of-interest allegations are reportedly based on Khan’s presence at the MGM Grand resort in Las Vegas during the cyberattack, which is estimated to have given a $100 million blow to the company’s operations. According to MGM, the FTC chairwoman’s presence at the resort has already driven 15 consumer lawsuits against the company. Khan’s recusal is reportedly requested as her attendance gives her the capacity to be a witness in the matter. At the same time, the lawsuit has asked the court to rule the respective FTC rules unconstitutional.
Unconstitutional Rules Allegations:
As LVJR reports, MGM also alleges that the FTC’s identity theft-related rules are unconstitutional as they reportedly impact the company’s customer information safety. On the other hand, the FTC considers MGM subject to these rules as the company reportedly keeps financial records of high-rolling gamblers. As reported, MGM has asked the court to otherwise rule reasonable submission deadlines as the FTC is reportedly requesting massive information submissions within deadlines as tight as 11 days.
Cyberattack Triggered Dispute:
The dispute between the Federal Trade Commission and MGM Resorts International reportedly started during the September cyberattack that disrupted operations of slot machines, access cards, and credit card payment systems. The FTC Chairwoman Linda M. Khan was staying in Las Vegas for a conference and questioned the MGM staff about the data security procedures applied in the given case to reportedly receive no specific explanation. On 25 January 2024, the FTC filed the CID.
Petitions Denial Triggered Lawsuit:
MGM’s lawsuit alleges Khan’s presence as her personal experience: “The voluminous requests posed by the CID closely track the events involving Chair Khan, with certain requests seemingly derived directly from Chair Khan’s personal experience in transacting business with MGM during the attack,” the lawsuit reportedly says. After the company’s petition to modify the CID and recluse Khan from the proceedings was denied by the commission on 1 April 2024, MGM filed the case to the court, claiming a violation of its constitutional rights. As reported by LVRJ, MGM’s lawsuit says: “This categorical refusal to hear petitions to recuse or disqualify — even in extreme cases like this one — violates the Due Process Clause of the Fifth Amendment.”