Michael J. Daugherty & Labmd, Inc. v. Sheer
891 F.3d 386
D.C. Cir.2018Background
- LabMD, a small Georgia medical-services company, stored personal patient data including HIPAA-covered information; a file (the "1718 File") containing ≈9,300 patients was found on LimeWire and downloadable via a LabMD computer.
- Tiversa, a data-security company, notified LabMD and the FTC about the file; LabMD removed LimeWire but disputes consumer harm and suggests Tiversa sought to sell services.
- FTC enforcement attorneys Alain Sheer and Ruth Yodaiken opened and pursued an investigation into LabMD’s data-security practices beginning before CEO Michael Daugherty publicly criticized the FTC.
- Daugherty publicly labeled the investigation a "fishing expedition," and plaintiffs allege Sheer and Yodaiken "ramped up" the investigation and recommended enforcement in retaliation for that criticism.
- The FTC Commission later unanimously authorized an enforcement complaint against LabMD under Section 5 of the FTC Act; LabMD brought suit against the individual FTC attorneys alleging First Amendment retaliation.
- The district court denied qualified immunity for the retaliation claim; the D.C. Circuit reversed, holding the attorneys were entitled to qualified immunity because plaintiffs failed to plausibly allege that retaliatory motive was the but-for cause of the enforcement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FTC attorneys are liable for First Amendment retaliation for escalating an enforcement action after Daugherty's public criticism | Daugherty: attorneys escalated investigation/prosecution in retaliation for his speech, violating First Amendment | Sheer & Yodaiken: investigation and enforcement had an independent, legitimate basis (the publicly available 1718 File); qualified immunity protects them | Held: Defendants entitled to qualified immunity; plaintiffs failed to plausibly allege retaliation was the but-for cause of enforcement |
| Whether causation (but-for) must be alleged where one official recommends enforcement to another decisionmaker | Daugherty: alleged "ramping up" and temporal proximity suffice to show causation | Defendants: Hartman/Crawford-El require pleading causation; recommendation to a separate decisionmaker weakens causal inference | Held: Plaintiffs failed to plead causation; alternative lawful basis (data breach) undermines claim that retaliatory motive caused the enforcement decision |
| Whether the right to be free from prosecutorial/enforcement action motivated in part by retaliation was clearly established | Daugherty: right to criticize government is clearly established; serious escalation for criticism is unconstitutional | Defendants: no controlling precedent making such conduct clearly unlawful when a legitimate basis exists | Held: No clearly established right in these circumstances; qualified immunity applies |
Key Cases Cited
- Crawford-El v. Britton, 523 U.S. 574 (1998) (proof of improper motive alone is insufficient; must also show causation to establish constitutional violation)
- Hartman v. Moore, 547 U.S. 250 (2006) (absence or presence of probable cause bears heavily on causation in retaliatory-prosecution claims involving recommendation to a separate decisionmaker)
- Ashcroft v. al-Kidd, 563 U.S. 731 (2011) (clearly established law must place constitutional question beyond debate; avoid defining rights at high level of generality)
- Reichle v. Howards, 566 U.S. 658 (2012) (retaliation principles require particularized rights; general right against retaliation may be too broad for clearly established rule)
- Mullenix v. Luna, 136 S. Ct. 305 (2015) (qualified immunity protects all but the plainly incompetent or those who knowingly violate the law)