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Case 5:22-cv-04325-EJD Document 93 Filed 09/23/22 Page 1 of 31
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`MICHAEL MOISEYEV (pro hac vice)
`michael.moiseyev@weil.com
`CHANTALE FIEBIG (pro hac vice)
`chantale.fiebig@weil.com
`WEIL, GOTSHAL & MANGES LLP
`2001 M Street, NW, Suite 600
`Washington, DC 20036
`Telephone: (202) 682-7000
`Facsimile: (202) 857-0940
`
`MARK C. HANSEN (pro hac vice)
`mhansen@kellogghansen.com
`KELLOGG, HANSEN, TODD,
`FIGEL & FREDERICK, P.L.L.C.
`1615 M Street, N.W., Suite 400
`Washington, D.C. 20036
`Telephone: (202) 326-7900
`Facsimile: (202) 326-7999
`
`Attorneys for Defendant META PLATFORMS, INC.
`
`Christopher J. Cox (Bar No. 151650)
`HOGAN LOVELLS US LLP
`855 Main St.
`Suite 200
`Redwood City, CA 94063
`Telephone No.: (650) 463-4000
`Facsimile No.: (650) 463-4199
`chris.cox@hoganlovells.com
`
`Attorney for Defendant WITHIN UNLIMITED, INC.
`
`(Additional Counsel Listed on Signature Page)
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`SAN JOSE DIVISION
`Case No. 5:22-cv-04325-EJD
`
`DEFENDANTS’ OPPOSITION TO FTC’S
`MOTION TO STRIKE DEFENDANTS’
`AFFIRMATIVE DEFENSES
`
`Date: October 21, 2022
`Time: 11:00 a.m.
`Dept.: Courtroom 4 – 5th Floor
`Judge: Honorable Edward J. Davila
`
`FEDERAL TRADE COMMISSION,
`
`
`v.
`
`META PLATFORMS, INC., et al.,
`
`
`
`
`Plaintiff,
`
`Defendants.
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
`DEFENDANTS’ AFFIRMATIVE DEFENSES
`
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`
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`CASE NO. 5:22-CV-04325-EJD
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`Case 5:22-cv-04325-EJD Document 93 Filed 09/23/22 Page 2 of 31
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`TABLE OF CONTENTS
`
`B. 
`
`Page
`PRELIMINARY STATEMENT .....................................................................................................1 
`BACKGROUND .............................................................................................................................4 
`META’S REPEATED CHALLENGES TO CHAIR KHAN’S
`A. 
`PARTICIPATION ...................................................................................................4 
`THE FTC REFUSES TO PRODUCE DISCOVERY ON ITS AFFIRMATIVE
`CASE AND META’S DEFENSES .........................................................................6 
`LEGAL STANDARD ......................................................................................................................9 
`ARGUMENT .................................................................................................................................10 
`THE COURT SHOULD NOT STRIKE META’S AFFIRMATIVE DEFENSES [#14,
`I. 
`17, 18, 19, 20, 21] ..............................................................................................................10 
`A. 
`BIAS-RELATED DEFENSES [#18, 19, 21] ........................................................11 
`The Bias Defenses Go To Core Issues In This Case And Are Within This
`1. 
`Court’s Jurisdiction ....................................................................................11 
`The Bias Defenses Are Well-Pleaded And Plausible ................................15 
`2. 
`STRUCTURAL ARTICLE II DEFENSE [#17]....................................................19 
`B. 
`EQUITABLE DEFENSES [#20] ...........................................................................20 
`C. 
`SELECTIVE ENFORCEMENT [#14] ..................................................................23 
`D. 
`THE FTC’S REQUEST TO STRIKE WITH PREJUDICE IS UNFOUNDED ...............24 
`II. 
`CONCLUSION ..............................................................................................................................24 
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
`DEFENDANTS’ AFFIRMATIVE DEFENSES
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`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`
`
`
`
`
`Page(s)
`
`Abbott Labs v. Gardner,
`387 U.S. 136 (1967) .......................................................................................................................... 20
`
`Am. Cyanamid Co. v. FTC,
`363 F.2d 757 (6th Cir. 1966) ................................................................................................ 12, 17, 23
`
`Am. Gen. Ins. Co. v. FTC,
`589 F.2d 462 (9th Cir. 1979) ............................................................................................................ 18
`
`Axon Enter., Inc. v. FTC,
`986 F.3d 1173 (9th Cir. 2021) ................................................................................................... passim
`
`CFTC v. Mintco LLC,
`2016 WL 3944101 (S.D. Fla. May 17, 2016) ................................................................................... 21
`
`Cinderella Career & Finishing Schs., Inc. v. FTC.,
`425 F.2d 583 (D.C. Cir. 1970) ................................................................................................... passim
`
`Dep’t of Commerce v. New York,
`139 S. Ct. 2551 (2019) .................................................................................................................. 7, 16
`
`EEOC v. UPS, Inc.,
`2017 WL 9482105 (E.D.N.Y. Mar. 9, 2017) .................................................................................... 21
`
`Elgin v. Dep’t of Treasury,
`567 U.S. 1 (2012) .............................................................................................................................. 14
`
`Erceg v. LendingClub Corp.,
`475 F. Supp. 3d 1071 (N.D. Cal. 2020) .................................................................................. 9, 17, 21
`
`Firearms Pol’y Coal. Second Amend. Def. Comm. v. Harris,
`192 F. Supp. 3d 1120 (E.D. Cal. 2016)............................................................................................. 15
`
`Fodera v. Equinox Holdings, Inc.,
`2021 WL 23294 (N.D. Cal. Jan. 4, 2021) ................................................................................... 16, 17
`
`Free Speech Sys., LLC v. Menzel,
`390 F. Supp. 3d 1162 (N.D. Cal. 2019) .............................................................................................. 9
`
`FTC v. Facebook, Inc.,
`581 F. Supp. 3d 34 (D.D.C. 2022) .............................................................................................. 17, 19
`
`FTC v. Golden Empire Mortg., Inc.,
`2009 WL 4798874 (C.D. Cal. Dec. 10, 2009) ............................................................................ 13, 16
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
`DEFENDANTS’ AFFIRMATIVE DEFENSES
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`
`FTC v. Simeon Mgmt. Corp.,
`532 F.2d 708 (9th Cir. 1976) ............................................................................................................ 11
`
`
`
`
`FTC v. Staples, Inc.,
`190 F. Supp. 3d 100 (D.D.C. 2016) .................................................................................................. 12
`
`FTC v. Staples, Inc.,
`239 F. Supp. 3d 1 (D.D.C. 2017) ...................................................................................................... 12
`
`FTC v. Warner Commc’ns, Inc.,
`742 F.2d 1156 (9th Cir. 1984) ........................................................................................ 11, 13, 15, 22
`
`FTC v. Weyerhaeuser Co.,
`665 F.2d 1072 (D.C. Cir. 1981) ........................................................................................................ 22
`
`FTC v. World Wide Factors, Ltd.,
`882 F.2d 344 (9th Cir. 1989) .............................................................................................................. 8
`
`GEOMC Co. v. Calmare Therapeutics Inc.,
`918 F.3d 92 (2d Cir. 2019)............................................................................................................ 2, 10
`
`Goobich v. Excelligence Learning Corp,
`2020 WL 1503685 (N.D. Cal. Mar. 30, 2020) ...................................................................... 10, 16, 24
`
`Hatamian v. Advanced Micro Devices, Inc.,
`2015 WL 511175 (N.D. Cal. Feb. 6, 2015) ................................................................................ 10, 24
`
`Hooks v. Kitsap Tenant Support Servs., Inc.,
`816 F.3d 550 (9th Cir. 2016) ...................................................................................................... 12, 19
`
`Humphrey’s Executor v. United States,
`295 U.S. 602 (1935) .................................................................................................................... 19, 20
`
`Jarkesy v. SEC,
`803 F.3d 9 (D.C. Cir. 2015) .............................................................................................................. 14
`
`Kohler v. Flava Enterprises, Inc.,
`779 F.3d 1016 (9th Cir. 2015) ............................................................................................................ 9
`
`Lindsey v. Normet,
`405 U.S. 56 (1972) ...................................................................................................................... 13, 20
`
`Martin-Marietta Corp. v. Bendix Corp.,
`690 F.2d 558 (6th Cir. 1982) ............................................................................................................ 15
`
`N.L.R.B. v. RELCO Locomotives, Inc.,
`734 F.3d 764 (8th Cir. 2013) ............................................................................................................ 13
`
`Neo4j, Inc. v. Graph Found. Inc.,
`2020 WL 2793577 (N.D. Cal. 2020) ............................................................................................ 9, 22
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
`DEFENDANTS’ AFFIRMATIVE DEFENSES
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`Olga C. v. Cnty. of Santa Clara,
`2017 WL 4642449 (N.D. Cal. Oct. 17, 2017) ........................................................................... 2, 9, 10
`
`
`
`
`Oracle v. Micron Tech., Inc.,
`817 F. Supp. 2d 1128 (N.D. Cal. 2011) ........................................................................................ 2, 10
`
`In re Otto Bock HealthCare North America, Inc.,
`2019 WL 5957363 (Nov. 1, 2019) .................................................................................................... 20
`
`SEC v. Hold Bros. On-line Inv. Servs. LLC,
`216 F. Supp. 3d 422 (D.N.J. 2016) ................................................................................................... 23
`
`SEC v. Nacchio,
`438 F. Supp. 2d 1266 (D. Colo. 2006) .............................................................................................. 21
`
`SEC v. Nat. Diamonds Inv. Co.,
`2020 WL 95065 (S.D. Fla. Jan. 8, 2020) .......................................................................................... 21
`
`SEC v. Ripple Labs, Inc.,
`2022 WL 748150 (S.D.N.Y. Mar. 11, 2022) .................................................................................... 10
`
`Seila L. LLC v. CFPB,
`140 S. Ct. 2183 (2020) ...................................................................................................................... 19
`
`Stivers v. Pierce,
`71 F.3d 732 (9th Cir. 1995) ....................................................................................................... passim
`
`Texaco, Inc. v. FTC,
`336 F.2d 754 (D.C. Cir. 1964) .......................................................................................................... 19
`
`Thunder Basin Coal Co. v. Reich,
`510 U.S. 200 (1994) .......................................................................................................................... 14
`
`TRW, Inc. v. FTC,
`647 F.2d 942 (9th Cir. 1981) ...................................................................................................... 20, 21
`
`United States v. Armstrong,
`517 U.S. 456 (1996) .......................................................................................................................... 23
`
`United States v. Innovative Biodefense,
`2019 WL 6971054 (N.D. Cal. Aug. 22, 2019) ........................................................................... 20, 23
`
`United States v. Sellers,
`906 F.3d 848 (9th Cir. 2018) ............................................................................................................ 24
`
`Williams v. Pennsylvania,
`579 U.S. 1 (2016) .................................................................................................................. 16, 18, 21
`
`Wyshak v. City Nat’l Bank,
`607 F.2d 824 (9th Cir. 1979) .............................................................................................................. 9
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
`DEFENDANTS’ AFFIRMATIVE DEFENSES
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`Statutes and Regulations
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`15 U.S.C. § 53(b) ................................................................................................................................ 1, 18
`
`16 C.F.R. § 3.26 ...................................................................................................................................... 18
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`16 C.F.R. § 4.17 ........................................................................................................................................ 6
`
`Other Authorities
`
`Fed. R. Civ. P. 12(f) ......................................................................................................................... passim
`
`Fed. R. Civ. P. 15(a)(2) ..................................................................................................................... 10, 24
`
`5C Wright & Miller, Fed. Prac. & Proc. Civ. § 1380 (3d ed., Apr. 2022 update) .................................... 6
`
`5C Wright & Miller, Fed. Prac. & Proc. Civ. § 1381 (3d ed., Apr. 2022 update) .................................... 9
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`DEFENDANTS’ AFFIRMATIVE DEFENSES
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`PRELIMINARY STATEMENT
`The Federal Trade Commission seeks a preliminary injunction to prevent Meta Platforms, Inc.
`from closing its acquisition of a virtual reality startup (Within Unlimited, Inc.) until after it adjudicates
`a pending administrative challenge to the transaction. To prevail, the FTC must make “a proper showing
`that, weighing the equities,” both public and private, “and considering the Commission’s likelihood of
`ultimate success,” the requested injunction “would be in the public interest.” 15 U.S.C. § 53(b)(2). As
`Defendants will prove at the evidentiary hearing, the FTC’s antitrust claims are inconsistent with settled
`law and mischaracterize the dynamic competition Meta’s virtual reality offerings face at every turn; the
`Court should reject the FTC’s bid for an injunction on that ground alone.
`But the FTC’s bid for a preliminary injunction fails for another, independently sufficient reason:
`Lina Khan, the Chair of the FTC, has made numerous public statements that demonstrate her bias against
`Meta and prejudgment that Meta can never be allowed to acquire another company, and thus her inability
`to fairly adjudicate Meta’s proposed acquisition of Within. Her participation, both as the deciding vote
`to authorize this case (reportedly over the contrary recommendation of the FTC Staff) and as an
`adjudicator in the FTC’s Part 3 proceeding, has irrevocably tainted the federal-court lawsuit and the
`related administrative proceeding, such that any order enjoining or prohibiting the Within acquisition
`cannot be entered or survive appeal as a matter of law. See Stivers v. Pierce, 71 F.3d 732, 741 (9th Cir.
`1995) (agency official acting as adjudicator must recuse if a disinterested observer would conclude she
`has prejudged the case); Cinderella Career & Finishing Schs., Inc. v. FTC., 425 F.2d 583 (D.C. Cir.
`1970) (reversing FTC judgment where biased commissioner participated in the administrative
`proceeding). Even a neutral FTC would have a very slim chance of “ultimate success” with these
`theories, and this FTC can never issue an administrative judgment barring the transaction that an Article
`III court could let stand on appeal. Further, it cannot demonstrate a balance of the equities in its favor,
`when the case is tainted by patently improper and inequitable conduct.
`Chair Khan’s continued participation in this proceeding, notwithstanding her actual and apparent
`bias, is the context for the FTC’s motion to strike certain of the affirmative defenses asserted by
`Defendants. For obvious reasons, the FTC wishes to remove the issue of Chair Khan’s bias from the case
`and thereby avoid independent judicial examination of both the improper manner in which the case was
`OPPOSITION TO FTC’S MOTION TO STRIKE
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`commenced and the inequitable and unconstitutional nature of a proceeding before an adjudicator who
`has inarguably prejudged the transaction. The FTC is also, improperly, using the motion to strike as the
`basis for withholding relevant and discoverable evidence in this litigation, including documents that
`would further establish Chair Khan’s bias. But the FTC has no valid grounds for hiding its misconduct
`from this Court’s scrutiny, and its attempt to paper over that misconduct only highlights the need to have
`these issues resolved in a fair and constitutionally appropriate forum.
`In a word, the FTC’s argument that the Court should strike certain affirmative defenses is
`meritless. Motions to strike are granted only if “it is clear that the matter to be stricken could have no
`possible bearing on the subject matter of the litigation.” Olga C. v. Cnty. of Santa Clara, 2017 WL
`4642449, at *3 (N.D. Cal. Oct. 17, 2017) (Davila, J.) (citation omitted); Oracle v. Micron Tech., Inc.,
`817 F. Supp. 2d 1128, 1132 (N.D. Cal. 2011) (“A court must deny the motion to strike if there is any
`doubt whether the allegations in the pleadings might be relevant in the action.”). Chair Khan’s bias goes
`to the issues this Court must decide: likelihood of success on the merits and balance of the equities. The
`affirmative defenses that the FTC seeks to strike clearly have a bearing on the subject matter of this
`litigation. The FTC has offered no valid reason for striking them, and its motion must be denied.
`First, the FTC argues that Defendants’ affirmative defenses are inadequately pleaded. But the
`FTC has ample notice of the facts underlying the defenses, which is all Rule 12(f) requires. In its Answer,
`Meta refers to Chair Khan’s public statements showing her bias and prejudgment of this matter, and
`explains the basis of the defenses arising from her disqualification, citing applicable case law. None of
`this is a surprise to the FTC, as Meta also cross-references a recusal petition that has been pending before
`the Commission since before this lawsuit was authorized or filed, and which lays out the facts in even
`more detail. Further, the pleading standard for affirmative defenses is liberal, and the law favors
`resolution on the merits. To the extent the Twombly plausibility standard applies to affirmative defenses,
`it does not require the same specificity as complaint allegations, see GEOMC Co. v. Calmare
`Therapeutics Inc., 918 F.3d 92, 98 (2d Cir. 2019), and Meta more than meets that standard here. The
`Court should reject the FTC’s cursory arguments to the contrary.
`Second, as a fallback, the FTC argues that this Court lacks jurisdiction to hear Defendants’
`constitutional defenses under Axon. This argument misapprehends both the defenses asserted and the
`OPPOSITION TO FTC’S MOTION TO STRIKE
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`import of Axon. The plaintiff there, knowing the FTC would imminently commence an administrative
`proceeding against it, filed its own action in district court to enjoin the administrative proceeding on
`various constitutional grounds (among them, the patent unfairness of a tribunal in which the FTC has
`rigged the rules to emerge as the victor every time). The Ninth Circuit held that the district court lacked
`jurisdiction to entertain those arguments, finding that they could be addressed in the circuit court of
`appeals after an agency judgment. The Supreme Court has granted review of the Axon ruling. But even
`if Axon remains good law, Meta is not seeking to enjoin anything; it is seeking to defend itself,
`appropriately, on the ground that the FTC cannot prevail on the merits of its challenge to the Within
`transaction where the entire proceeding has been tainted by the improper participation of a biased
`adjudicator. The Court here must make a predictive judgment, which necessarily involves not only the
`agency’s likelihood of affirming its own decision to block the merger (a near certainty, as the Axon court
`noted), but also the likelihood of a Commission vote to block the acquisition—with Chair Khan among
`the adjudicators—surviving appeal (nil, according to settled law). That defect, which makes it both
`unlikely the agency will succeed through appeal and inequitable to grant an injunction in these
`circumstances, goes directly to issues the Court must decide in this matter.
`Accordingly, the FTC’s motion to strike is not proper under Rule 12(f). It fails to account for the
`applicable liberal pleading standards, and its jurisdictional arguments are specious. Moreover, even if
`any of the FTC’s arguments gained traction, there would be no basis for dismissal “with prejudice”;
`rather, Meta can and should be given leave to amend. But again, this motion is not really a challenge to
`Meta’s pleading at all. Rather, the FTC is trying to convince this Court to artificially narrow the issues
`for trial and conceal discoverable evidence—so that it can seek extraordinary equitable relief without
`having to carry its burden on likelihood of success or on the equitable factors. Most importantly, the
`FTC does not want to explain—to Meta, this Court, or the public—how Chair Khan could possibly
`continue to participate in this matter notwithstanding her actual and apparent bias, which is disqualifying
`under the standard the FTC itself has identified as applicable to proceedings like this one. The Court
`should reject this gamesmanship and deny the FTC’s motion.
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
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`BACKGROUND
`
`A. Meta’s Repeated Challenges to Chair Khan’s Participation
`Chair Khan’s anti-Meta statements and her objections to all future Meta acquisitions regardless
`of the merits—which form the basis of the affirmative defenses that the FTC now seeks to strike—are
`no surprise to, and are well understood by, the FTC. Meta has brought these specific statements to the
`Commission’s attention several times in petitions, briefs, and administrative motions. Chair Khan and
`the Commission have thus far refused to decide whether they require recusal.
`On July 25, 2022, after the Staff concluded its investigation of the Within transaction but before
`the Commission was scheduled to vote on whether to approve it, Meta petitioned the FTC for Chair
`Khan’s recusal from the vote and any further participation in the proceeding. Meta explained that Chair
`Khan must recuse herself before the vote because her “public statements and writings reflect her belief
`that the government should block future acquisitions by Meta, regardless of the merits of the
`transaction.” July 25, 2022 Meta Recusal Petition (Obaro Decl. Ex. 1), at 2. Meta cited Chair Khan’s
`pre-FTC work for the Open Market Institute, where she advocated for the FTC to “[p]rohibit all future
`acquisitions by Facebook for at least five years,” as well as her public statements that she “hope[d]” that
`“if Facebook tomorrow announces it is acquiring another company, . . . the FTC would look at that very
`closely and block it.”1 Meta also referred to her statements on Twitter in 2020 (again, before she became
`Chair), in which she prejudged Meta’s entire acquisition strategy as unlawful and called upon
`
`
`1 See id. at 1-2 (citing Press Release, Open Markets Inst., Fines for Facebook Aren’t Enough: The Open
`
`Markets Institute Calls on FTC to Restructure Facebook to Protect Our Democracy (Mar. 22, 2018),
`
`https://www.openmarketsinstitute.org/publications/fines-for-facebook-arent-enough-theopen- markets-
`
`institute-calls-on-ftc-to-restructure-facebook-to-protect-our-democracy [https://perma.cc/P4AU-C4CZ]
`
`(accessed Sept. 20, 2022); Sen. Bernie Sanders, The Bernie Sanders Show: The Greatest Threat to Our
`
`Democracy?,
`
`YouTube
`
`(May
`
`15,
`
`2018)
`
`(starting
`
`at
`
`20:29),
`
`https://www.youtube.com/watch?v=wuCAy10hlHI (accessed Sept 20, 2022).
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
`DEFENDANTS’ AFFIRMATIVE DEFENSES
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`Case 5:22-cv-04325-EJD Document 93 Filed 09/23/22 Page 11 of 31
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`“enforcers” to block future transactions.2
`In its petition, Meta also appended and referred to another petition that it had filed with the agency
`about a year earlier, seeking Chair Khan’s recusal from the FTC’s ongoing lawsuit in FTC v. Facebook,
`Inc., No. 1:20-cv-03590-JEB (D.D.C.). That petition quoted many other of Chair Khan’s anti-Meta
`statements and writings—for example, her claims that Meta was “associated with a host of social ills,”
`including “serving as a tool for the incitement of genocide in Myanmar” and “amplifying the influence
`of ‘fake news,’ conspiracy theories, bot-generated propaganda, and inflammatory and divisive content
`more broadly.” July 14, 2021 Meta Recusal Petition (Obaro Decl. Ex. 2) at 16.3 As the petition notified
`the FTC, Chair Khan has made a career of targeting Meta. She has maintained, consistently and very
`publicly, that Meta is a serial antitrust violator that must not be allowed to acquire other companies. Id.4
`Chair Khan has not disavowed or explained any of these statements since her appointment.
`Nonetheless, without any public ruling on—or acknowledgement of—the pending recusal petition, the
`Commission voted 3-2 to authorize the present Complaint for a preliminary injunction pending the
`agency adjudication of the Within transaction, with Chair Khan casting the decisive third vote.5 Two
`
`2
`(citing Lina M. Khan
`Id.
`
`(@linamkhan), Twitter
`
`(Dec.
`
`9,
`
`2020,
`
`4:20PM),
`
`https://web.archive.org/web/20210614143417/https://twitter.com/linamkhan/status/133682805669513
`
`6259) (accessed Sept. 20, 2022).
`
`3 Id. (citing Lina M. Khan & David E. Pozen, A Skeptical View of Information Fiduciaries, 133 Harv. L.
`
`Rev. 497, 498 (2019)).
`
`4 The FTC declined to address Meta’s July 14, 2021 Petition, claiming it did not have a mechanism for
`
`addressing the issue; Meta then filed a motion to dismiss the FTC’s amended complaint in Facebook,
`
`again citing the numerous statements that established her anti-Meta bias. See Memorandum of Law In
`
`Support of Facebook, Inc.’s Motion To Dismiss Amended Complaint, FTC v. Facebook, Inc., No. 1:20-
`
`cv-3590-JEB, at 38-39 (D.D.C. Oct. 4, 2021), DE 83-1 (Obaro Decl. Ex. 3).
`
`5 Leah Nylen, FTC’s Khan Overruled Staff to Sue Meta Over VR App Deal, Bloomberg (July 29, 2022),
`
`https://www.bloomberg.com/news/articles/2022-07-29/ftc-s-khan-overruled-staff-to-sue-meta-over-
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
`DEFENDANTS’ AFFIRMATIVE DEFENSES
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`5
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`Case 5:22-cv-04325-EJD Document 93 Filed 09/23/22 Page 12 of 31
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`weeks after it filed this Complaint, the Commission initiated the agency adjudication, voting to institute
`the administrative complaint, still without acknowledging or ruling on Meta’s pending recusal petition.
`See Admin. Complaint, Dkt. No. 9411 (F.T.C. Aug. 11, 2022) (Obaro Decl. Ex. 5). The FTC
`subsequently informed Meta that it will consider the recusal petition as a disqualification motion under
`FTC Rule 4.17. See 8/24/22 FTC Letter (Obaro Decl. Ex. 6). Yet no response to it has been filed, and
`no ruling has been made—even though Meta filed its petition about two months ago, before the
`Complaint in this case was authorized.
`And Chair Khan continues to make prejudicial statements about this case, even as she oversees
`the Part 3 proceeding. She recently provided written testimony to a Senate subcommittee in which she
`evidently prejudged the merits of the Within transaction as advancing an incipient monopoly. See
`Oversight of the Enforcement of the Antitrust Laws, Prepared Statement of the FTC Before the Subcomm.
`on Competition Policy, Antitrust, and Consumer Rights of the Senate Judiciary, 117th Cong. (2022), at
`6,
`https://www.ftc.gov/system/files/ftc_gov/pdf/P210100SenateAntitrustTestimony09202022.pdf
`(accessed Sept. 22, 2022) (Obaro Decl. Ex. 7) (stating that “[t]he FTC takes seriously its Congressional
`mandate to arrest monopolies in their incipiency,” which is “demonstrated, in particular, by its July 2022
`challenge to Meta’s proposed acquisition of Within Unlimited”). Notably, in the same testimony, Chair
`Khan declined to “comment[ ] on the merits” of the Illumina acquisition of Grail, since that case “is
`currently pending in an administrative proceeding.” Id.
`Meta has also moved to stay the administrative proceeding in part based on Chair Khan’s bias,
`referring again to the recusal petitions and appended exhibits. See Motion to Stay, In re Meta Platforms,
`Inc. et al., Dkt. No. 9411 (F.T.C. Aug. 26, 2022) (Obaro Decl. Ex. 8). The FTC’s Complaint Counsel
`opposed the motion, arguing that Meta’s objection to Chair Khan’s participation did not constitute cause
`for a stay. Motion to Stay Opp., In re Meta Platforms, Inc. et al., Dkt. No. 9411 (F.T.C. Sept. 6, 2022)
`(Obaro Decl. Ex. 9).
`
`B.
`The FTC Refuses to Produce Discovery on Its Affirmative Case and Meta’s Defenses
`In its Answer to the Complaint in this Court, Meta raised Chair Khan’s bias as part of its
`
`
`virtual-reality-deal (accessed Sept. 20. 2022) (Obaro Decl. Ex. 4).
`
`OPPOSITION TO FTC’S MOTION TO STRIKE
`DEFENDANTS’ AFFIRMATIVE DEFENSES
`
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`6
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`Case 5:22-cv-04325-EJD Document 93 Filed 09/23/22 Page 13 of 31
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`affirmative defenses, as both an independent basis for dismissal and grounds for denying the equitable
`relief sought by the FTC. See Answer and Affirmative Defenses of Meta Platforms, Inc. [ECF No. 84],
`Affirmative Defense Nos. 14 (Complaint reflects improper selective enforcement); 17 (FTC violates
`Article II); 18 (FTC is not entitled to relief because of Chair Khan’s disqualification ); 19 (Chair Khan’s
`disqualification prevents FTC from proving elements necessary for equitable relief); 20 (FTC cannot
`obtain equitable relief under doctrine of unclean hands, estoppel, or other equitable defenses); and 21
`(Due Process Clause barred FTC from commencing action). Meta concisely and clearly pleaded the
`factual basis for these defenses, namely that “Chair Khan has made numerous public statements that
`demonstrate her bias against Meta, and in particular its acquisitions, demonstrating her lack of
`impartiality with respect to Meta’s proposed acquisition.” Id. at 17. Meta also cross-referenced the
`recusal petition—incorporating it and its contents by reference—which is now

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