Federal Trade Commission v. IQVIA Holdings Inc.

Background

The Federal Trade Commission brought the case to seek a preliminary injunction blocking IQVIA Holdings Inc.’s proposed acquisition of Propel Media, Inc. The Federal Trade Commission alleged that the acquisition would substantially lessen competition by combining two of the top three providers of programmatic advertising directed specifically at healthcare professionals in the United States. An evidentiary hearing was scheduled for November 20 through December 1, 2023, and the Federal Trade Commission’s administrative proceedings were scheduled to begin on December 20, 2023.

IQVIA and Propel asserted several constitutional defenses. They challenged the Federal Trade Commission’s structure, including restrictions on removing commissioners and the administrative law judge; the lack of Republican commissioner participation in deliberations and voting; the fairness and neutrality of the administrative proceedings; and alleged violations of due process and equal protection. Both defendants also asserted laches, a defense based on unreasonable delay, and equitable estoppel, which can prevent a party from taking a position after another party reasonably relied on that party’s earlier words or conduct.

Legal standard

Under Federal Rule of Civil Procedure 12(f), a court may strike an insufficient, redundant, immaterial, irrelevant, or scandalous defense from a pleading. The Court of Appeals for the Second Circuit’s three-part test asks whether any factual or legal question could allow the defense to succeed and whether keeping the defense would prejudice the opposing party. The court applied the plausibility standard to the factual allegations and examined whether the defenses were legally sufficient.

Constitutional defenses

The court held that the constitutional defenses were not material to either part of the Federal Trade Commission Act’s preliminary-injunction inquiry under 15 U.S.C. § 53(b). That inquiry considers the Federal Trade Commission’s likelihood of success on the antitrust merits and the relevant equities. The court concluded that “likelihood of ultimate success” refers to the Federal Trade Commission’s prospects in the underlying administrative antitrust proceedings, not to the likelihood that the agency would ultimately prevail after separate constitutional challenges or judicial review.

The court also ruled that the constitutional defenses were not relevant to the equities. It explained that the relevant public equities include economic effects, pro-competitive benefits for consumers, and effective relief for the Federal Trade Commission. Any private equities generally concern the consequences of the requested injunction, not alleged defects in the Federal Trade Commission’s administrative proceedings. The court further reasoned that resolving the constitutional challenges in this preliminary-injunction case would not stop the administrative proceedings and therefore would not redress the defendants’ alleged constitutional injuries. The defendants remained free to raise those challenges in a separate proceeding.

The court found the constitutional defenses legally insufficient or inadequately pleaded and found no factual issue that could allow them to succeed. It also found that the Federal Trade Commission would be prejudiced because litigating the defenses could redirect discovery and attention toward the agency’s conduct, complicate an expedited antitrust proceeding, and force the Federal Trade Commission to litigate fundamental constitutional issues on the same fast schedule. The court therefore struck the constitutional defenses with prejudice.

Equitable defenses

The court struck the laches defense because binding Second Circuit precedent provides that laches is unavailable against the federal government when it acts to enforce a public right or protect the public interest. The court concluded that the Federal Trade Commission brought this action to protect the public interest. It also found that the Federal Trade Commission would be prejudiced by having to spend time and resources litigating an invalid defense. The laches defense was stricken with prejudice.

The defendants’ estoppel defense asserted that the Federal Trade Commission should be bound by claims, assertions, and admissions made by the United States government in separate antitrust litigation involving Google and digital advertising. The court explained that equitable estoppel against the government requires an especially strong showing, including reasonable and detrimental reliance and affirmative misconduct by the government. The defendants did not allege that they relied to their detriment on the government’s position in the Google litigation, identify a misrepresentation of fact made to them, or provide facts showing affirmative misconduct. The court found that litigating the defense would also prejudice the Federal Trade Commission. The estoppel defense was stricken with prejudice.

The opinion additionally noted that the defendants had referenced estoppel concerning the Federal Trade Commission’s potential claims about IQVIA’s prior acquisitions but had not pursued that argument in their briefing. The court stated that the argument could be treated as abandoned and, even if it was not, would be stricken for the same lack of a government misrepresentation and detrimental reliance.

Disposition

The court granted the Federal Trade Commission’s motion to strike. The constitutional and equitable defenses were stricken with prejudice, and the Clerk of Court was directed to terminate the motion. The opinion did not decide whether the proposed acquisition violated the antitrust laws or whether the defendants’ constitutional challenges would succeed in a separate proceeding.