MGM Resorts sues FTC, agency chair over cyberattack investigation

Richard N. Velotta, Las Vegas Review-Journal on

Published in Business News

MGM Resorts International filed a lawsuit Monday against the Federal Trade Commission and its top officer, Chairwoman Lina M. Khan, claiming the agency violated the company’s Fifth Amendment right to due process while investigating a September cyberattack against the company.

In the four-count action, MGM also alleges the FTC failed to follow its own conflict-of-interest guidelines.

The lawsuit, filed in U.S. District Court for the District of Columbia, seeks an injunction to stop the FTC from seeking a civil investigative demand in its investigation of MGM related to the cyberattack unless Khan disqualifies herself from the matter. The demand is an administrative subpoena that allows federal agencies to request large amounts of information from private companies without going through court procedures.

A representative of the FTC on Monday said the agency had no comment about the lawsuit.

The lawsuit alleges Khan and a senior aide have a conflict of interest because they were guests at the MGM Grand as the cyberattack, which cost the company an estimated $100 million, was unfolding last year.

MGM says the publicity of Khan’s experience triggered 15 consumer class-action lawsuits against MGM. The company wants Khan disqualified because she could be a witness in the matter.


MGM also has asked the court to find the FTC’s rules on recusal unconstitutional and rule the company isn’t a financial institution and therefore shouldn’t be subject to the FTC’s rules for them related to identity theft and keeping customer information safe.

Rules and ‘markers’

The FTC considers MGM subject to those rules because the company issues “markers” to high-rolling gamblers. Gambling with markers represents a small percentage of casino play, and gaming companies say it’s the equivalent of a gambler playing on a tab and not on credit.

The lawsuit also seeks a reasonable deadline to file the CID if the FTC is allowed to continue its investigation. The company wrote a letter to the agency unsuccessfully seeking a deadline extension because the agency is asking for the production of more than 100 different categories of information spanning multiple years. MGM believes much of the information sought is irrelevant to the cyberattack, according to a letter sent to the FTC in February.


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