MGM Resorts International has initiated a legal battle against the Federal Trade Commission (FTC) and its chairwoman, Lina M. Khan. Filed on April 15, 2024, the lawsuit accuses the FTC of infringing upon MGM’s Fifth Amendment rights during its probe into a cyberattack that occurred in September 2023. The company alleges that the investigation was mishandled, highlighting a failure to adhere to conflict-of-interest guidelines and questioning the fairness of the investigative demands.
Details of the Cyberattack and FTC’s Actions
The cyberattack in question caused significant disruptions at MGM properties, affecting everything from slot machines to credit card processing systems. In response, the FTC, led by Khan, issued a Civil Investigative Demand (CID) on January 25, 2024. This demand sought detailed information on MGM’s data security measures, which MGM claims are unjustified and overreaching given their business model as a casino operator, not a financial institution.
Conflict of Interest Allegations
A pivotal point in MGM’s lawsuit is the alleged conflict of interest involving Chairwoman Khan. During the time of the cyberattack, Khan was staying at the MGM Grand, an experience that directly influenced the FTC’s subsequent actions according to the lawsuit. MGM argues that Khan’s personal experience and the actions following it have biased the investigation, making it unfair and unconstitutional.
MGM’s Demands and FTC’s Response
MGM is seeking an injunction to halt the FTC’s investigative demands unless Khan recuses herself from the matter. The company has also requested the court to declare that they are not subject to the financial regulations cited by the FTC in their investigation. Despite these legal motions, the FTC has declined to comment on the ongoing lawsuit, maintaining their stance and continuing their probe into MGM’s practices.
Implications for MGM and the FTC
This legal confrontation has broader implications for both MGM and the FTC. For MGM, the outcome of this lawsuit could influence how they manage data security and compliance moving forward. For the FTC, a ruling against them could affect how they regulate and investigate companies, particularly in how they handle potential conflicts of interest and the scope of their authority over non-financial institutions.
In conclusion, the lawsuit between MGM Resorts International and the FTC represents a significant legal and regulatory confrontation, rooted in issues of due process, regulatory overreach, and conflict of interest. As the case progresses, it will likely set precedents for how similar cases are handled in the future, impacting both corporate governance and federal regulatory practices.
