The Federal Trade Commission is trampling on executives’ First Amendment rights and trying to force them into disclosing privileged conversations with in-house counsel in its lawsuit against Amazon for allegedly locking consumers into its Prime program illegally, the Association of Corporate Counsel says in a proposed amicus curiae brief it submitted to the court hearing the case.
The agency, ACC says, “puts the defendant in the untenable position of having to surrender attorney-client privilege protections to rebut the plaintiff’s allegation.”
The FTC in June sued Amazon for the way it allegedly uses so-called dark patterns to get consumers to sign up for its Prime program and make it difficult for them to cancel it.
The agency amended its complaint in September to reveal the names of executives who spearheaded the effort and also lift some redacted text, including text on the role of in-house counsel.
As part of its amended complaint, the FTC accused the company’s in-house counsel of not cooperating in good faith and, more substantively, using attorney-client privilege protections to keep internal communications from scrutiny.
Among other things, the FTC said, company counsel were being looped into communications having to do with Prime enrollment and what’s known informally as the “Iliad Flow” — the process consumers follow to cancel their subscription — even if the communications didn’t involve legal matters.
“By identifying (and causing others to identify) communications concerning Nonconsensual Enrollment and the Iliad Flow as privileged when they were not,” the agency said in its September filing, “Amazon … obstructed the FTC’s investigation, delaying the Commission’s ability to access the falsely-labeled material.”
This aggressive use of attorney-client privilege, the FTC said, implies executives had actual knowledge of illegal conduct and is thus grounds for seeking civil penalties against them, including under the Restore Online Shoppers’ Confidence Act, one of the laws the FTC says the company violated.
Self-incriminating exercise
In its brief, ACC calls out this charge, labeling it an attempt to “impose penalties based on Defendants’ mere act of conferring with counsel…. Conferring with a lawyer is a constitutionally protected right and cannot serve as a basis for enhanced liability.”
What’s more, ACC says, it’s putting executives in a position where they would have to break attorney-client privilege and disclose protected communications to defend themselves.
“For the right to consult with an attorney to be meaningful, it cannot be used as a basis for liability in the event of litigation,” ACC says. “If mere consultation with an attorney could establish liability, this would put the defendant in the untenable position of having to waive attorney-client privilege to rebut the plaintiff’s allegation.”
It would also undermine the confidentiality that executives and their counsel rely on to have frank communications about the law.
“Attorney-client privilege applies to both in-house and outside counsel,” ACC said. The FTC’s “theory of liability would turn this act of finding out how to obey the law by speaking with counsel into a self-incriminating exercise.”
The case is pending trial.
