United States v. Twitter, Inc.

Background

The United States sued Twitter, Inc., alleging that Twitter misrepresented the extent to which it protected users’ nonpublic contact information. The government alleged that Twitter represented that it collected telephone numbers and email addresses to secure accounts but failed to disclose that it also used that information to help advertisers reach preferred audiences. The complaint asserted violations of the Federal Trade Commission Act and a 2011 FTC order.

The parties jointly asked the court to enter a stipulated order stating that they had resolved all issues. The court entered that order on May 26, 2022. It included a $150 million civil penalty, required payment to the Treasurer of the United States, required Twitter and its successors to consent to reopening an FTC proceeding and modifying a prior FTC order, gave the Department of Justice certain rights to request documents, and retained jurisdiction to construe, modify, and enforce the stipulated order. Twitter neither admitted nor denied the complaint’s allegations except as specifically stated in the order, and both sides waived rights to appeal or otherwise challenge the stipulated order.

The FTC’s resulting administrative order required Twitter to establish and maintain a comprehensive privacy and information-security program. It also required assessments by qualified, objective, independent third-party professionals. Twitter engaged Ernst & Young for that assessment. After Elon Musk acquired Twitter, X Corp. reported that the FTC sent it 17 demand letters containing more than 200 individual demands, deposed five former Twitter employees and an Ernst & Young partner, and sought to depose Musk. X Corp. characterized the FTC’s activity as excessive and targeted at Musk. The government attributed the increased investigation to major workforce and organizational changes that it said raised concerns about compliance with the administrative order.

X Corp.’s Requests

X Corp. moved under Federal Rule of Civil Procedure 60(b)(5) and (6) to terminate or modify the stipulated order. Rule 60(b)(5) and (6) permits relief from a final order when, among other things, applying the order prospectively is no longer equitable or another reason justifies relief. X Corp. argued that changed circumstances—including the FTC’s investigative conduct after Musk’s acquisition—made continued enforcement inequitable and interfered with Ernst & Young’s independence.

In the alternative, X Corp. asked the court to order the FTC to provide discovery, stay enforcement of the stipulated order until the discovery was produced, and stay the FTC’s deposition of Musk.

Court’s Analysis

The court held that X Corp. was seeking relief from obligations imposed by the FTC’s administrative order, not from obligations imposed by the court’s stipulated order. The court explained that the stipulated order primarily required X Corp. to consent to reopening the FTC proceeding, waive specified FTC show-cause procedures, consent to modification of the prior FTC order, provide certain documents to the Department of Justice, and comply with the stipulated order’s other literal terms.

The court read the stipulated order literally and concluded that it helped bring about the FTC’s administrative order but did not turn that administrative order into a court order. The administrative order had legal force because it was an FTC order. Rule 60(b) allows a court to modify its own orders, not another tribunal’s order. The court therefore concluded that no modification of the stipulated order could relieve X Corp. of its obligation to comply with the FTC’s administrative order. The court also noted that this case was not a petition to review an FTC order, which the court said could not be filed in a district court.

The court rejected the alternative discovery request because the flaw in X Corp.’s motion was purely legal and discovery could not change the court’s lack of power to grant the requested relief. The court also said it did not understand how it could order the FTC not to depose Musk because the stipulated order did not place the court in charge of the FTC’s enforcement of its administrative order.

Disposition

The court denied X Corp.’s motion to terminate or modify the stipulated order. It also denied X Corp.’s alternative request for discovery or to stay Musk’s deposition. The conclusion states that X Corp.’s motion was denied in its entirety.