Case 2:22-cv-00349-BLW Document 12-1 Filed 01/03/23 Page 1 of 16
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`James W. Harlow, Maryland Bar (no number issued)
`Senior Trial Attorney
`Consumer Protection Branch, Civil Division
`U.S. Department of Justice
`PO Box 386
`Washington, DC 20044-0386
`(202) 514-6786
`james.w.harlow@usdoj.gov
`
`M. Andrew Zee, California Bar No. 272510
`Kate Talmor, Maryland Bar (no number issued)
`Trial Attorney
`Federal Programs Branch, Civil Division
`U.S. Department of Justice
`450 Golden Gate Avenue
`San Francisco, CA 94102
`(415) 436-6646 (Zee)
`(202) 616-8351 (Talmor)
`m.andrew.zee@usdoj.gov
`kate.talmor@usdoj.gov
`
`Attorneys for Defendant
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF IDAHO
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`Case No. 2:22-cv-00349-BLW
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`Memorandum in Support of
`Defendant’s Motion to Dismiss for Lack
`of Subject-Matter Jurisdiction and
`Failure to State a Claim
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`Kochava Inc.,
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`Federal Trade Commission,
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`v.
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`Plaintiff,
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`Defendant.
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`TABLE OF CONTENTS
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`INTRODUCTION ............................................................................................................................... 1 
`BACKGROUND ................................................................................................................................ 2 
`LEGAL STANDARD .......................................................................................................................... 3 
`ARGUMENT ..................................................................................................................................... 4 
`I.  Kochava has not plausibly alleged standing ............................................................... 4 
`II.  Even if Kochava has standing, the Complaint must nonetheless be dismissed ..... 6 
`A.  Kochava has failed to identify any cause of action ............................................... 6 
`B. 
`The preemptive relief requested in the Complaint is inappropriate ................. 7 
`C.  Any intended constitutional challenge to the FTC’s structure fails ................. 12 
`CONCLUSION ................................................................................................................................ 14 
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`INTRODUCTION
`In August 2022, the Federal Trade Commission (“FTC”) informed Kochava Inc.
`(“Kochava”), a data analytics and marketing firm, that it was the target of a potential
`civil enforcement action. Kochava responded by racing to the courthouse and suing the
`FTC. But in its haste, the company filed a complaint that does not satisfy threshold
`jurisdictional and pleading requirements. And Kochava’s tactic of filing suit in an
`attempt to beat the government to the punch is, in any event, disfavored. Its Complaint
`should be dismissed for at least three reasons.
`First, Kochava fails to plausibly allege standing. The Complaint contains nothing
`more than a barebones, conclusory statement of unspecified injury. That is facially
`insufficient to establish the requisite concrete and actual injury in fact, or an imminent
`threat of one.
`Second, the Complaint invokes no cause of action. Even had Kochava properly
`asserted a cause of action, this case embodies the disfavored tactic of a declaratory suit
`that seeks to preempt a forthcoming enforcement action. Recognizing the judicially
`disfavored nature of that strategy, courts regularly dismiss such preemptive suits in
`favor of hearing the case filed by the government, the natural plaintiff. Thus, at bottom,
`Kochava is not entitled to the declaratory or injunctive relief requested here because all
`underlying issues will be resolved in the FTC’s pending enforcement action (which also
`is before this Court).
`Third, Kochava’s constitutional argument is not even potentially viable. Its
`assertion that statutory removal restrictions for FTC administrative law judges violate
`Article II is irrelevant because Kochava does not even allege that it is subject to any
`administrative proceeding, much less one pending before an ALJ. Just the opposite is
`true; the Complaint contemplated that the FTC would file an enforcement action in
`federal court (and that is what has happened). Kochava’s preemptive suit should be
`dismissed.
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`BACKGROUND
`Kochava is an Idaho-based “digital marketing and analytics services” firm. Compl.,
`Dkt. 1, at ¶ 7. Among other services, Kochava aggregates “third-party provided mobile
`device data,” id., including the “latitude, longitude, IP address and [Mobile Advertising
`Identifier] associated with a consumer’s device,” id. ¶ 19. The company links this
`information to “emails and primary IP addresses” in its “Data Marketplace.” Id.
`Kochava then sells the data. Id. ¶ 7.
`The FTC began investigating Kochava’s business under the agency’s “continuing
`duty to prevent . . . unfair or deceptive acts or practices in commerce.” United States v.
`Morton Salt Co., 338 U.S. 632, 639 (1950); see 15 U.S.C. § 45(a)(2). Around “July and
`August 2022, the FTC sent to Kochava a Proposed Complaint for Permanent Injunction
`and Other Relief.” Compl. ¶ 16. The FTC’s Proposed Complaint alleged that the
`company’s data aggregation and marketing services constituted unfair or deceptive acts
`or practices prohibited by 15 U.S.C. § 45(a). Compl. ¶¶ 15–18. As Kochava
`acknowledged, the FTC drafted the Proposed Complaint for filing “in the United States
`District Court,” id. ¶ 15, rather than to commence an administrative proceeding before
`the Commission. Compare 15 U.S.C. § 53(b) (authorizing injunctive suits by the FTC in
`district court), with id. § 45(b) (authorizing the FTC to commence administrative
`proceedings).
`Days later, on August 12, 2022, Kochava raced to court and filed this action “under
`. . . Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the Declaratory Judgment Act, 28
`U.S.C. §§ 2201 and 2202.” Compl. ¶ 10. Kochava sought to enjoin the FTC from seeking
`injunctive relief against the company for violations of the FTC Act. Id. ¶ 35. It also
`requested declaratory judgments that “the FTC’s structure violates Article II by
`providing improper insulation from the president,” that recited the standard for the
`FTC to seek injunctive relief under 15 U.S.C. § 53(b), and that the company’s business
`was “not an ‘unfair . . . act or practice.’” Id. ¶¶ 33, 36.
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`A couple of weeks later, on August 29, 2022, the FTC filed the anticipated
`enforcement action in this Court (“the Enforcement Action”). Compl., Dkt. 1, FTC v.
`Kochava Inc., No. 2:22-cv-00377-BLW (D. Idaho Aug. 29, 2022). Kochava subsequently
`moved to dismiss the Enforcement Action, raising legal issues that tracked its
`Complaint’s concerns about Article II, the FTC Act’s standard for injunctive relief, and
`the adequacy of the FTC’s claim of a prohibited business act or practice. See Def.’s Mot.
`to Dismiss, Dkt. 7, FTC v. Kochava Inc., No. 2:22-cv-00377-BLW (D. Idaho Oct. 28, 2022).
`The FTC responded, Kochava replied, and a hearing is set for February 21, 2023. See
`Dkt. 11–13, FTC v. Kochava Inc., No. 2:22-cv-00377-BLW (D. Idaho Nov. 18, 2022).
`In this case, Kochava served the United States Attorney on November 4, 2022, see
`ECF No. 6, and the FTC now timely moves to dismiss Kochava’s preemptive suit under
`Federal Rule of Civil Procedure 12(b)(1) and (b)(6), see Fed. R. Civ. P. 12(a)(2).
`
`LEGAL STANDARD
`Kochava bears “the burden of establishing” the Court’s subject-matter jurisdiction.
`DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3 (2006). In this Rule 12(b)(1) facial
`attack on jurisdiction, the Court looks to the Complaint and “determines whether the
`allegations are sufficient as a legal matter to invoke the court’s jurisdiction.” Salter v.
`Quality Carriers, Inc., 974 F.3d 959, 964 (9th Cir. 2020); see Safe Air for Everyone v. Meyer,
`373 F.3d 1035, 1039 (9th Cir. 2004). If they are not, the case must be dismissed. Fed. R.
`Civ. P. 12(h)(3).
`Additionally, Kochava’s Complaint must “state[] a plausible claim for relief” to
`“survive[] a motion to dismiss” under Rule 12(b)(6). Ashcroft v. Iqbal, 556 U.S. 662, 679
`(2009). “Threadbare recitals of the elements of a cause of action, supported by mere
`conclusory statements, do not suffice.” Id. at 678. Similarly, a claim that fails as a matter
`of law “must be dismissed, without regard to whether it is based on an outlandish legal
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`theory or on a close but ultimately unavailing one.” Neitzke v. Williams, 490 U.S. 319,
`326–27 (1989).
`
`ARGUMENT
`
`I. Kochava has not plausibly alleged standing
`“As the party invoking federal jurisdiction,” Kochava “bear[s] the burden of
`demonstrating . . . standing.” TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2207 (2021). At
`this stage, the company “must plausibly plead facts to establish the following ‘three
`elements’: (1) that [it] ‘suffered an injury in fact,’ (2) that there is ‘a causal connection
`between the injury and the conduct complained of,’ and (3) that it is ‘likely, as opposed
`to merely speculative, that the injury will be redressed by a favorable decision.’” Dutta
`v. State Farm Mut. Auto. Ins. Co., 895 F.3d 1166, 1173 (9th Cir. 2018) (quoting Lujan v.
`Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)). However, Kochava fails to demonstrate an
`“injury in fact, the ‘[f]irst and foremost’ of standing’s three elements.” Spokeo, Inc. v.
`Robins, 578 U.S. 330, 338–39 (2016) (quoting Steel Co. v. Citizens for Better Env’t, 523 U.S.
`83, 103 (1998)).
`“To establish injury in fact,” Kochava “must show that [it] suffered ‘an invasion of
`a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or
`imminent, not conjectural or hypothetical.’” Spokeo, 578 U.S. at 339 (quoting Lujan, 504
`U.S. at 560). The Complaint references injury in fact only once. It alleges that “[t]he
`entry of injunctive relief (or even the prospect of the same) is injury in fact within the
`meaning of Article III.” Compl. ¶ 15. But looking to “the facts as they exist[ed] when the
`complaint [wa]s filed,” Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830 (1989),
`no court had enjoined Kochava, and indeed no suit had then been filed; the company
`merely feared that the FTC might file a lawsuit, see Compl. ¶ 16.
`As for “the prospect” of a federal court enjoining Kochava, id. ¶ 15, any “threatened
`injury” must be “certainly impending” or, at least, there must be “a ‘substantial risk’
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`that the harm will occur.” Clapper v. Amnesty Int’l USA, 568 U.S. 398, 409 & 414 n.5
`(2013). Yet the Complaint is devoid of any “concrete facts” about the likelihood of that
`injury, which would turn on both the FTC’s decision to file suit and a federal court’s
`independent determinations about the merits of the FTC’s claims and the need for
`injunctive relief. Id. at 409; see Spokeo, 578 U.S. at 338 (“[A]t the pleading stage, the
`plaintiff must clearly allege facts demonstrating each element.”) (cleaned up). That
`omission is fatal because courts are “reluctant to endorse standing theories that require
`guesswork as to how independent decisionmakers will exercise their judgment.”
`Clapper, 568 U.S. at 413. Like in Clapper, Kochava “can only speculate as to whether that
`court will authorize” an injunction against the company, let alone what the terms of that
`hypothetical future injunction might be. Id. And speculation about a “possible future
`injury” from a hypothetical adverse ruling in an unfiled enforcement action is “not
`sufficient” for standing. Id. at 409; see City of San Diego v. Monsanto Co., 334 F. Supp. 3d
`1072, 1083 (S.D. Cal. 2018) (finding “threat that [company] may be found liable in this
`action” or another action “remains speculative” and “insufficient to establish an ‘actual
`or imminent” injury); cf. Bassett v. ABM Parking Servs., Inc., 883 F.3d 776, 783 (9th Cir.
`2018) (rejecting plaintiff’s “theory of ‘exposure’” to future injury as “too speculative for
`Article III purposes”) (internal quotation omitted).
`Kochava also cannot conjure a cognizable injury out of the “prospect”—or risk—of
`an adverse court order. Bare risk “is utterly abstract—not concrete, direct, real, and
`palpable.” Pub. Citizen, Inc. v. Nat’l Highway Traffic Safety Admin., 489 F.3d 1279, 1297
`(D.C. Cir. 2007) (Kavanaugh, J.). “[R]isk alone” is therefore “insufficient to confer
`standing.” Legacy Cmty. Health Servs., Inc. v. Smith, 881 F.3d 358, 370 (5th Cir. 2018).
`Because Kochava has not plausibly alleged any “real harm” attached to the abstract
`prospect of an injunction, that theory of injury fails. Spokeo, 578 U.S. at 341.
`Finally, the Complaint cursorily alleges that, if the FTC commenced an
`administrative enforcement proceeding, it “could take years, inflicting irreparable and
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`significant harm upon Kochava.” Compl. ¶ 5. Again though, Kochava does not clearly
`allege any facts, as it must, about the nature of the purported harm, which by Kochava’s
`own framing is merely something that “could” happen. See Spokeo, 578 U.S. at 338.
`Furthermore, the Complaint elsewhere concedes that the supposed cause of this
`unspecified future harm—an “administrative proceeding”—is not a possibility. Compl.
`¶ 5. Kochava alleged that the FTC proposed “to seek injunctive relief in the United
`States District Court,” id. ¶ 15, not commence an administrative proceeding, see id. ¶ 1
`(“the threatened action against Kochava . . . invokes judicial as opposed to
`administrative process”). At bottom, Kochava has not “plausibly plead[ed] facts” to
`show its standing and the Complaint must be dismissed. Dutta, 895 F.3d at 1173.
`
`II. Even if Kochava has standing, the Complaint must nonetheless be dismissed
`Even if Kochava had standing to sue, its preemptive suit nonetheless falters for
`three reasons and must be dismissed. First, the Complaint does not contain the most
`basic element of a lawsuit—invocation of any cause of action available to the company.
`Second, Kochava’s active defense in the Enforcement Action precludes the Court from
`issuing declaratory or injunctive relief here. Rather, a long line of precedent dictates the
`dismissal of this preemptive suit. And third, Kochava has failed to properly plead a
`claim alleging the unconstitutionality of the FTC’s structure.
`
`A. Kochava has failed to identify any cause of action
`A plaintiff may sue in federal court only if some source of law grants it a cause of
`action. See, e.g., Alexander v. Sandoval, 532 U.S. 275, 286 (2001). Accordingly, those who
`“challenge an agency action in court,” like Kochava, “must invoke some law creating
`and defining a right to seek judicial review.” 33 Charles Alan Wright et al., Federal Practice
`and Procedure § 8301 (2d. ed. 2018). Absent a substantive cause of action, a court cannot
`grant declaratory relief. See, e.g., Fiedler v. Clark, 714 F.2d 77, 79 (9th Cir. 1983) (per
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`curiam); Hummel v. Nw. Tr. Servs., Inc., 180 F. Supp. 3d 798, 810 (W.D. Wash. 2016). The
`Complaint, however, does not invoke any cause of action that Kochava could assert.
`The Complaint opens by disavowing any claim under the Administrative
`Procedure Act (“APA”). See Compl. ¶ 1 (“The APA is inapplicable.”).1 Instead, Kochava
`alleges that “[t]his action arises under . . . Section 5(a) of the FTC Act, 15 U.S.C. § 45(a),
`and the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202.” Compl. ¶ 10. Section
`5(a) of the FTC Act “declare[s] unlawful” all “[u]nfair methods of competition in or
`affecting commerce, and unfair or deceptive acts or practices in or affecting commerce,”
`and empowers “[t]he Commission” to prevent them. 15 U.S.C. § 45(a). The Ninth
`Circuit has long held that Section 5(a) does not provide a private right of action. See
`Dreisbach v. Murphy, 658 F.2d 720, 730 (9th Cir. 1981); Carlson v. Coca-Cola Co., 483 F.2d
`279, 280 (9th Cir. 1973); Sperling v. Stein Mart, Inc., 291 F. Supp. 3d 1076, 1087 (C.D. Cal.
`2018). It is similarly well established that the Declaratory Judgment Act “is not an
`independent source of federal jurisdiction”; rather, it “presupposes the existence of a
`judicially remediable right.” Schilling v. Rogers, 363 U.S. 666, 677 (1960); see, e.g., Fiedler,
`714 F.2d at 79. Because the Complaint, on its face, does not cite any applicable cause of
`action, the case should be dismissed. Sandoval, 532 U.S. at 286.
`
`B. The preemptive relief requested in the Complaint is inappropriate
`Even if Kochava had identified a valid cause of action, the Complaint should
`nonetheless be dismissed because neither declaratory nor injunctive relief is appropriate
`here, see Compl. ¶¶ 33, 35–36; thus, no “relief can be granted,” Fed. R. Civ. P. 12(b)(6).
`The Declaratory Judgment Act, 28 U.S.C. § 2201(a), “has long been understood ‘to
`confer on federal courts unique and substantial discretion in deciding whether to
`
`1 In any event, an APA claim based on a proposed or filed FTC lawsuit would be
`precluded by FTC v. Standard Oil Co. of California, 449 U.S. 232, 246 (1980), which held
`that the Commission’s “issuance of a complaint averring” a violation of the FTC Act
`was “not ‘final agency action’ under . . . the APA.” Under Standard Oil’s reasoning, the
`FTC’s mere proposal to file a complaint a fortiori does not amount to final agency action.
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`declare the rights of litigants.’” MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 136
`(2007) (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995)). “Consistent with the
`nonobligatory nature of the remedy,” this Court “is authorized, in the sound exercise of
`its discretion, . . . to dismiss an action seeking a declaratory judgment” at any time.
`Wilton, 515 U.S. at 288. “[C]onsiderations of practicality and wise judicial
`administration” guide the dismissal of declaratory-judgment actions. Id.
`Several considerations weigh heavily against Kochava’s requested declaratory
`relief. First, a declaratory judgment should not be “sought merely for the purposes of
`procedural fencing or to obtain a ‘res judicata’ advantage.” Gov’t Emps. Ins. Co. v. Dizol,
`133 F.3d 1220, 1225 n.5 (9th Cir. 1998) (quoting Am. States Ins. Co. v. Kearns, 15 F.3d 142,
`145 (9th Cir. 1994) (Garth, J., concurring)). “Courts take a dim view of declaratory
`plaintiffs who file their suits mere days or weeks before the coercive suits filed by a
`‘natural plaintiff.’” AmSouth Bank v. Dale, 386 F.3d 763, 788 (6th Cir. 2004); see, e.g.,
`Morgan Drexen, Inc. v. Consumer Fin. Prot. Bureau, 785 F.3d 684, 697–98 (D.C. Cir. 2015).
`Such “anticipatory suit[s]” are dismissed, Alltrade, Inc. v. Uniweld Prod., Inc., 946 F.2d
`622, 628 (9th Cir. 1991), in order to deter “races to the courthouse,” AmSouth Bank, 386
`F.3d at 788; see Xoxide, Inc. v. Ford Motor Co., 448 F. Supp. 2d 1188, 1193 (C.D. Cal. 2006).
`Specifically with respect to the FTC, numerous courts have rejected attempts “to
`secure tactical leverage” by turning the agency from plaintiff into defendant. POM
`Wonderful LLC v. FTC, 894 F. Supp. 2d 40, 45 (D.D.C. 2012); see, e.g., Endo Pharms. Inc. v.
`FTC, 345 F. Supp. 3d 554, 565 (E.D. Pa. 2018); Swish Mktg., Inc. v. FTC, 669 F. Supp. 2d
`72, 78–79 (D.D.C. 2009); see also FTC v. Am. Vehicle Prot. Corp., No. 22-CV-60298-RAR,
`2022 WL 14638465, at *5–7 (S.D. Fla. Oct. 25, 2022). As the Supreme Court itself has
`cautioned, a potential target of FTC action cannot preemptively sue the agency and
`“turn[] prosecutor into defendant.” Standard Oil Co., 449 U.S. at 243. Kochava’s lawsuit
`fits that mold. The company raced to court only days after learning about the FTC’s
`proposed enforcement action. See Compl. ¶ 16; see also Xoxide, 448 F. Supp. 2d at 1192
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`(“Anticipatory suits are found when the plaintiff in the first-filed action filed suit on
`receipt of specific, concrete indications that a suit by the defendant was imminent[.]”)
`(quotation omitted). This procedural fencing “strongly counsels against exercising
`jurisdiction here,” even if Kochava had a valid cause of action. Swish Mktg., 669 F. Supp.
`2d at 79; see Morgan Drexen, 785 F.3d at 698 (affirming district court’s finding that
`company “engaged in procedural fencing” by suing agency during settlement
`discussions).
`Second, in weighing a declaratory action, a court should strive to “avoid duplicative
`litigation.” Gov’t Emps. Ins. Co., 133 F.3d at 1225; Fern v. Turman, 736 F.2d 1367, 1370 (9th
`Cir. 1984) (observing that whether “another action, involving substantially the same
`issue, is pending in a . . . federal court is a potent factor in discretionary refusal to
`assume jurisdiction”) (quotation omitted) (emphasis added). “Where a pending
`coercive action, filed by the natural plaintiff, would encompass all the issues in the
`declaratory judgment action, the policy reasons underlying the creation of the
`extraordinary remedy of declaratory judgment are not present, and the use of that
`remedy is unjustified.” Swish Mktg., 669 F. Supp. 2d at 80. Relatedly, “[t]he anticipation
`of defenses is not ordinarily a proper use of the declaratory judgment procedure.”
`Morgan Drexen, 785 F.3d at 697 (quotation omitted). Otherwise, a potential defendant in
`an enforcement action could “turn every case in which there is a defense into two
`cases.” Buntrock v. SEC, 347 F.3d 995, 997 (7th Cir. 2003).
`Only a few weeks after Kochava filed this suit, the FTC commenced the
`Enforcement Action, which is also before this Court. The Enforcement Action will
`resolve whether Kochava’s data analytics and marketing practices violate the FTC Act.
`Compare Compl. ¶¶ 33(iii), 36(iii), with Compl., Dkt. 1, at ¶¶ 36–38, FTC v. Kochava Inc.,
`No. 2:22-cv-00377-BLW (D. Idaho Aug. 29, 2022). Also, Kochava’s motion to dismiss the
`Enforcement Action presents the same issues referenced in its preemptive Complaint
`about Article II and the FTC Act’s standard for injunctive relief, and for which it seeks
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`declaratory judgments here. Compare Compl. ¶¶ 33(i)–(ii), 36(i)–(ii), with Def.’s Mot. to
`Dismiss, Dkt. 7, at 8–9, 14–17, FTC v. Kochava Inc., No. 2:22-cv-00377-BLW (D. Idaho Oct.
`28, 2022).2 Because Kochava preemptively requested declaratory relief on the same three
`issues that it has now raised as defenses in the Enforcement Action, the company’s suit
`is “properly considered an anticipatory defense.” Swish Mktg., 669 F. Supp. 2d at 80.
`That provides “a potent factor” for “refus[ing] to assume jurisdiction.” Fern, 736 F.2d at
`1370 (quotation omitted) (emphasis added); see Swish Mktg., 669 F. Supp. 2d at 80; POM
`Wonderful, 894 F. Supp. 2d at 44; Endo Pharm., 345 F. Supp. 3d at 564.
`Third, “the availability and relative convenience of other remedies” also weighs
`heavily against this Court’s declaratory jurisdiction. Gov’t Emps. Ins. Co., 133 F.3d at
`1225 n.5 (quoting Am. States Ins. Co., 15 F.3d at 145 (Garth, J., concurring)). The pending
`Enforcement Action affords Kochava a “full opportunity to contest the legality of any
`prejudicial proceeding against” it. FTC v. Claire Furnace Co., 274 U.S. 160, 174 (1927).
`Indeed, as noted above, Kochava has already briefed in the Enforcement Action the
`issues on which it seeks declaratory relief here. See Swish Mktg., 669 F. Supp. 2d at 80
`(noting that party “will be able to raise in the” FTC enforcement action “the same
`argument[] it has pursued in this action”). Thus, the pendency of the Enforcement
`Action ensures that a dismissal of this suit would not curtail Kochava’s ability to
`present its arguments. Accordingly, Kochava’s declaratory action disserves sound
`“judicial administration” and should be dismissed. Wilton, 515 U.S. at 288.
`Lastly, Kochava asks for injunctive relief to prohibit the FTC from seeking an
`injunction against the company. Compl. ¶ 35. However, under “the basic doctrine of
`equity jurisprudence,” “courts of equity should not act . . . when the moving party has
`
`
`2 Like its Complaint, Kochava’s motion to dismiss also presents arguments about
`the nondelegation and major-questions doctrines. Compare Compl. ¶ 2, with Def.’s Mot.
`to Dismiss, Dkt. 7, at 17–19, FTC v. Kochava Inc., No. 2:22-cv-00377-BLW (D. Idaho Oct.
`28, 2022).
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`an adequate remedy at law and will not suffer irreparable injury if denied equitable
`relief.” O’Shea v. Littleton, 414 U.S. 488, 499 (1974) (quoting Younger v. Harris, 401 U.S. 37,
`43–44 (1971)); see Confederated Tribes & Bands of Yakama Nation v. Yakima Cnty., 963 F.3d
`982, 989 (9th Cir. 2020) (“To be entitled to a permanent injunction, a plaintiff must
`demonstrate,” among other elements, “that it has suffered an irreparable injury” and
`“that remedies available at law are inadequate[.]”) (quotation omitted).
`The pending Enforcement Action affords Kochava an adequate remedy because the
`company may challenge (and has challenged) the FTC’s ability to secure injunctive
`relief. See Am. Vehicle Prot., 2022 WL 14638465, at *5 (observing that overlap between
`company’s declaratory claims and arguments for dismissal of FTC enforcement action
`“demonstrat[e] that [company] has other adequate remedies in court”); Am. Fin. Benefits
`Ctr. v. FTC, No. 17-04817, 2018 WL 3203391, at *9 (N.D. Cal. May 29, 2018) (agreeing that
`FTC “civil enforcement action” is an “adequate remedy” because the relief “Plaintiffs
`seek—a ruling that the Companies are either not subject to or in compliance with the
`[regulation]—will be available in that action”); cf. United States v. Elias, 921 F.2d 870, 875
`(9th Cir. 1990) (holding that “administrative forfeiture proceedings” provided “an
`adequate remedy at law” and thus precluded “equitable jurisdiction” over a motion for
`return of property); Morgan Drexen, Inc. v. Consumer Fin. Prot. Bureau, 979 F. Supp. 2d
`104, 111–12 (D.D.C. 2013) (concluding that a motion to dismiss a “pending [civil]
`enforcement action” constitutes an “adequate remedy”). Furthermore, Kochava cannot
`show that it would suffer irreparable harm by having to defend itself in the
`Enforcement Action. At worst, the company would incur “litigation expense,” which
`“does not constitute irreparable injury.” Renegotiation Bd. v. Bannercraft Clothing Co., 415
`U.S. 1, 24 (1974); see Standard Oil Co., 449 U.S. at 244 (rejecting company’s assertion that
`“the expense and disruption of defending itself in protracted adjudicatory proceedings
`constitutes irreparable harm”).
`
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`Case 2:22-cv-00349-BLW Document 12-1 Filed 01/03/23 Page 14 of 16
`
`Lacking any basis for the Court to award declaratory or injunctive relief, Kochava’s
`suit should be dismissed because ultimately no “relief can be granted.” Fed. R. Civ. P.
`12(b)(6).
`
`C. Any intended constitutional challenge to the FTC’s structure fails
`Finally, any potential constitutional challenge to the FTC’s structure rests on a
`faulty premise and lacks any link between the supposed constitutional infirmity and
`harm to Kochava. In its Complaint, Kochava “seeks . . . a determination as to whether
`the FTC’s structure violates Article II of the Constitution by providing improper
`insulation from the president, and whether Kochava’s due process rights would be
`violated through any administrative proceeding.” Compl. ¶ 5. Even if Kochava had
`identified an available cause of action, the allegations must plausibly show the
`company’s “entitlement to relief.” Whitaker v. Tesla Motors, Inc., 985 F.3d 1173, 1176 (9th
`Cir. 2021). “The plausibility of a pleading,” required under Federal Rule of Civil
`Procedure 8, “derives from its well-pleaded factual allegations.” Id. However, after
`“removing conclusory statements of law from” Kochava’s Complaint, Eclectic Properties
`E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 998 (9th Cir. 2014), it falls far short of any
`viable constitutional claim.
`For starters, the Complaint’s constitutional allegations arise from a basic
`misunderstanding. Kochava explicitly intended to parrot the claims of the plaintiff in
`Axon Enterprise, Inc. v. FTC, 986 F.3d 1173 (9th Cir. 2021), cert. granted, 142 S. Ct. 895
`(Mem) (U.S. Jan. 24, 2022), a case which supposedly “raise[s] similar issues,” Compl.
`¶ 4; see id. ¶¶ 5, 13–15. As did the plaintiff in Axon Enterprise, Kochava worries whether
`the statutory “job protections” of “FTC administrative law judges” place them “outside
`the president’s power to control executive branch officers under the Constitution’s
`Article II,” and that its “due process rights would be violated through any
`administrative proceeding.” Compare id. ¶¶ 5, 33(i), 36(i), with id. ¶ 14.
`
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`Case 2:22-cv-00349-BLW Document 12-1 Filed 01/03/23 Page 15 of 16
`
`But there is a critical difference between this case and Axon Enterprise. In the latter,
`the FTC had commenced an “administrative proceeding” (about an antitrust matter),
`which could involve a hearing before an ALJ, a Commission Order, and eventual
`review in the courts of appeals. Axon Enter., 986 F.3d at 1176–77, 1180–81; see 15 U.S.C.
`§ 45(c)–(d). Here, by contrast, Kochava admits that the threatened FTC action—which
`has since been filed in district court—“invokes judicial as opposed to administrative
`process.” Compl. ¶ 1; see id. ¶ 15. So the Complaint contains no plausible allegation that
`Kochava might become party to an FTC “administrative proceeding” adjudicated by an
`FTC ALJ. Id. ¶ 5.
`That omission precludes any cause of action for alleged violations of Article II or
`the Fifth Amendment’s Due Process Clause (insofar as the Complaint might be read to
`have properly alleged any violation of that Clause). A claim challenging an allegedly
`unconstitutional removal restriction must “demonstrat[e] that the unconstitutional
`provision actually caused the plaintiff harm.” Decker Coal Co. v. Pehringer, 8 F.4th 1123,
`1137 (9th Cir. 2021). Because the only potential action by the FTC referenced in the
`Complaint (a federal court lawsuit) would not involve an ALJ, Compl. ¶ 16, Kochava
`necessarily cannot show that is “actually harmed” by the statutory removal restrictions
`for FTC ALJs, Kaufmann v. Kijakazi, 32 F.4th 843, 849 (9th Cir. 2022).
`Furthermore, this case does not implicate any due process concerns. Although
`Kochava notes that the FTC “acts as ‘prosecutor, judge and jury’” in administrative
`proceedings, Compl. ¶ 14, “[t]he combination of investigative and judicial functions
`within an agency does not, of itself, violate due process,” United States v. Litton Indus.,
`Inc., 462 F.2d 14, 16 (9th Cir. 1972) (citing FTC v. Cement Institute, 333 U.S. 683, 700-702
`(1948)). The Complaint also alleges only a potential enforcement action in federal court,
`Compl. ¶ 15, which proceeding amply “satisfies the requirements of due process,”
`Ewing v. Mytinger & Casselberry, 339 U.S. 594, 598 (1950). Thus, the Complaint contains
`no potentially plausible constitutional claim.
`
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`
`CONCLUSION
`For the foregoing reasons, the FTC’s Motion to Dismiss should be granted, and
`Kochava’s Complaint should be dismissed.
`
`January 3, 2023
`
`OF COUNSEL:
`
`ANISHA S. DASGUPTA
`General Counsel
`
`JOEL MARCUS
`Deputy General Counsel for Litigation
`Federal Trade Commission
`600 Pennsylvania Avenue, NW
`Washington, DC 20580
`
`Respectfully submitted,
`
`BRIAN M. BOYNTON
`Principal Deputy Assistant Attorney
`General
`
`HILARY K. PERKINS
`Assistant Director
`
`/s/ James W. Harlow
`JAMES W. HARLOW
`Senior Trial Attorney
`Consumer Protection Branch
`Civil Division
`U.S. Department of Justice
`P.O. Box 386
`Washington, DC 20044-0386
`(202) 514-6786
`james.w.harlow@usdoj.gov
`
`CHRISTOPHER HALL
`Assistant Director
`
`/s/ M. Andrew Zee
`M. ANDREW ZEE
`/s/ Kate Talmor
`KATE TALMOR
`Trial Attorney
`Federal Programs Branch
`Civil Division
`U.S. Department of Justice
`450 Golden Gate Avenue
`San Francisco, CA 94102
`(415) 436-6646 (Zee)
`(202) 616-8351 (Ta