The Federal Trade Commission yesterday urged a federal appeals court not to exempt lawyers from generally applicable business regulations again.
In 2005, the U.S. Court of Appeals for the D.C. Circuit ruled that the FTC could not force lawyers to comply with new rules about privacy notifications. But the agency said on Wednesday that decision should not restrict the court as it takes up another set of regulations that could bind lawyers.
The FTC made the argument in a case about rules designed to push creditors to prevent identity theft — known as the “red flag” rules. The agency says that lawyers act as creditors when they provide legal services without immediate payment from a client. The American Bar Association sued in August 2009, saying that the FTC was interpreting the definition of “creditor” too broadly and that federal agencies are generally barred from regulating the legal profession without explicit authority.
In October 2009, U.S. District Judge Reggie Walton of the District of Columbia ruled in favor of the ABA. The FTC is appealing to the D.C. Circuit.
The agency’s 75-page brief (PDF), filed yesterday, says the 2005 decision doesn’t apply because it was based on different statutory language. The key question in that case, the FTC says, was whether lawyers fall under the definition of “financial institution.”
“In the present case, by contrast, Congress went to great lengths to ensure that the text it enacted would achieve expansive coverage,” the brief says, referring to a 2003 law about identity theft. The brief is signed by Michael Bergman, an FTC attorney.
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