In an opinion issued Wednesday by Judge Edward J. Davila of the Northern District of California, the Federal Trade Commission (FTC) overwhelmingly won its motion to strike six of Meta Platform Inc’s twenty affirmative defenses.
The agency’s case aims to prevent Meta, described by public opinion as one of the largest providers of virtual reality (VR) devices and applications, from completing its acquisition of co-defendant Within Unlimited Inc. ., a software company that develops VR apps, including its popular VR fitness app “Supernatural.”
As previously reported, the FTC’s strike motion came after the two defendants responded to the lawsuit in August. Meta’s bid, in this case and the FTC’s bid against her for monopolizing the market for personal social networking services, is critically important, either to disqualify FTC Chairwoman Lina Khan or to maintain an affirmative defense declaring his alleged bias against the company.
Regarding this case, Meta has pleaded two defenses regarding how she believes Khan is both disqualified and how she has made “numerous public statements that demonstrate her bias against Meta, and in particular her acquisitions, demonstrating its lack of impartiality with regard to the acquisition proposed by Meta. “
Judge Davila’s 15-page opinion devoted most of its page space to the two defenses based on bias, but also those related to constitutionality, selective application and fairness, removing all and authorizing the modification of some.
As for the defenses of partiality, the opinion found them sufficiently pleaded but finally hit them with prejudice. The court focused on whether Chairman Khan’s alleged bias is relevant to the court’s consideration of the FTC’s request for an injunction terminating the acquisition under Section 13 ( (b) the FTC Act.
The injunction standard asks both what are the chances of the FTC succeeding on the merits of its request and what “balance of actions” favors. After weighing arguments based on case law, Justice Davila concluded that bias defenses were irrelevant to both considerations.
“Because these issues with Meta’s bias defenses are legal and fundamental in nature, an amendment would be futile,” the opinion concluded. Further, Judge Davila ruled that allowing them to appear would prejudice the FTC by threatening to shift the focus of litigation and discovery to the FTC’s actions rather than the defendants’ actions.
Meta is represented by Weil, Gotshal & Manges LLP and Kellogg, Hansen, Todd, Figel & Frederick PLLC, and Within by Hogan Lovells US LLP.