Tech Law Journal Daily E-Mail Alert
June 1, 2001, 8:00 AM ET, Alert No. 199.
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Beales May Head FTC Consumer Protection Bureau
5/31. The Wall Street Journal reported that incoming FTC Chairman Timothy Muris will appoint Howard Beales head of the FTC's Consumer Protection Bureau.
The FTC's Consumer Protection Division is involved in both fighting online fraud and promoting online privacy. Howard Beales is a "Chicago school" economist who is a professor at the business school at George Washington University in Washington DC. He is an Associate Professor of  Strategic Management & Public Policy in the School of Business and Public Management. He specializes in consumer research, contract law, economics of commercial free speech, applied macro-economics, advertising, public policy toward business, safety and health regulations.
Beales and Muris worked together at the FTC in the 1980s. They have also co-authored academic works. See, Howard Beales and Timothy Muris, State and Federal Regulation of National Advertising, The AEI Press, Washington DC, 1993. See, Amazon listing (out of print), and AEI order form.
Privacy Advocates Write to Muris
5/31. A collection of groups that engage in advocacy regarding online privacy sent a letter to Timothy Muris, the incoming Chairman of the FTC, in which they advocated that Muris "make the protection of privacy a top priority for the FTC." They listed among their requests that the FTC "Revisit the effectiveness of the "unfair and deceptive trade practices" regime to protect consumer privacy ..."
More People and Appointments
5/31. Michael Copps was sworn in as a Commissioner of the FCC. He is a Democrat, and a former aide to Sen. Ernest Hollings (D-SC). His term runs until runs until June 30, 2005. See, FCC release.
5/31. Kathleen Abernathy was sworn in as a Commissioner of the FCC. She is a Republican. Her term expires June 30, 2004. See, FCC release.
5/31. Valerie Caproni, Director of the SEC's Pacific Regional Office, will leave her position at the end of July to join the law firm of Simpson Thacher & Bartlett. See, SEC release.
New IP Suits
5/29. Radio Spirits Inc. filed a complaint in U.S. District Court (NDCal) against Napster alleging contributory and vicarious copyright infringement and unfair competition. Radio Spirits is the old-time radio and classic video subsidiary of MediaBay, Inc. (Case No. 01-02090.) See, MediaBay release.
5/31. Agere Systems filed a complaint in U.S. District Court (DDel) against Proxim alleging patent infringement. The three patents in suit relate to wireless local area networking products. See, Agere release.
5/31. Motorola filed a complaint in U.S. District Court against e-mail spammer Paging America alleging trademark infringement and unfair competition. Motorola stated that Paging America sent unsolicited e-mail messages that misled consumers into believing that Motorola was affiliated with Paging America, which contained Motorola trademarks, and which referenced free Motorola pagers that were neither free nor made by Motorola. See, Motorola release.
New Documents
USCA: opinion in Helwig v. Vencor re pleading standards in class action securities suits under the PSLRA, 5/31 (HTML, USCA).
USCA: opinion in Spectators' Communication Network v. Colonial Country Club re antitrust, 5/31 (HTML, USCA).
EPIC: letter to Muris re privacy, 5/31 (HTML, EPIC).
Divided 6th Circuit Addresses Pleading Standards in Securities Class Actions
5/31. The U.S. Court of Appeals (6thCir) issued its opinion in Helwig v. Vencor, a case regarding pleading standards in class action securities suits under the Private Securities Litigation Reform Act (PSLRA). The Court, sitting en banc, was split seven to six. Previously, the District Court, and then a divided three judge panel of the Appeals Court, concluded that plaintiffs failed to state a claim. See, Helwig v. Vencor, 210 F.3d 612 (6th Cir. 2000). The Appeals Court, sitting en banc, reversed. 
Plaintiffs are investors in Vencor, a health care provider now known as Kindred Healthcare. Plaintiffs filed a complaint in the U.S. District Court (WDKent) against Vencor, and several of its directors, alleging violation of federal securities laws. Plaintiffs plead misleading statements and omissions in violation of 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Plaintiffs sought class action status. Defendants moved to dismiss under Ruled 12(b)(6) for failure to state a claim. At issue is whether the plaintiffs' complaint meets the pleading requirements set by the Private Securities Litigation Reform Act of 1995 (PSLRA), which the Congress passed to insulate defendants from abusive suits. The PSLRA creates both a safe harbor for forward looking statements, and a heightened pleading requirement: plaintiffs must "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind."
The majority found that plaintiffs met the pleading requirement, and hence, reversed and remanded. The majority followed the approach taken by the First Circuit in Greebel v. FTP Software. The Court held that the PSLRA contains a "fact-sensitive approach to pleading". It wrote: "Because Congress did not endorse or prohibit a particular manner of pleading, we cannot disregard any set of facts as insufficient as a matter of law. We inquire instead whether those facts produce a strong inference of scienter in securities fraud, which in this Circuit is recklessness for statements of present or historical fact and actual knowledge in the case of forward-looking statements." The Court then enumerated the types facts that are probative of securities fraud, as listed in the Greebel case.
Merritt wrote the majority opinion, in which Martin, Daughtrey, Moore, Cole, Clay and Gilman joined. Kennedy wrote the dissent, in which Boggs, Norris, Suhrheinrich, Siler and Batchelder joined. The plaintiffs are represented by several law firms, including Milberg Weiss, a law firm based in San Diego that specializes in bringing securities class action suits against technology companies. Defendants are represented by several law firms, including Fried Frank.
Other Circuits. There is conflict among the various circuits on this issue. See, for example:
  Janas v. McCracken (In re Silicon Graphics Sec. Litig.), 183 F.3d 970 (9th Cir. 1999).
  Novak v. Kasaks, 216 F.3d 300 (2d Cir.).
  In re Advanta Corp. Sec. Litig., 180 F.3d 525 (3d Cir. 1999).
  Bryant v. Avado Brands, 187 F.3d 1271 (11th Cir. 1999).
  Greebel v. FTP Software, 194 F.3d 185 (1st Cir. 1999).
Editor's Note. Text that is green and underlined contains "mouse over text." That is, if you place your mouse pointer over the text, then a text box should pop up containing further text. This feature works in MS Outlook 2000, as well as in MS Internet Explorer 4 and above, but not in all e-mail programs and browsers.
Antitrust News
5/31. The U.S. Court of Appeals (5thCir) issued its opinion in Spectators' Communication Network v. Colonial Country Club, a Sherman Act antitrust case. Plaintiff, Spectators' Communication Network, alleged that it was excluded from broadcasting professional golf tournaments. The District Court granted summary judgment to Defendant. The Appeals Court reversed.
Today
The House and Senate are in recess for the Memorial Day District Work Period.
Recommended deadline for submitting written materials to the NIST regarding the June 19-21, 2001, meeting of the Computer System Security and Privacy Advisory Board (CSSPAB). The Advisory Board was established by the Computer Security Act of 1987 (Public Law 100-235) to advise the Secretary of Commerce and the Director of NIST on security and privacy issues pertaining to federal computer systems. The meeting will be held at the John Marshall School of Law in Chicago, Illinois. See, notice in Federal Register, May 11, 2001, Vol. 66, No. 92, at Page 24117.
12:15 PM. The Federal Communications Bar Association's Wireless Committee will host a luncheon. The topic will be placement of towers and antennas. For more information contact Arlice Johnson at arlice@fcba.org or 202-293-4000.
Monday, June 4
8:00 -10:00 AM. The Electronic Privacy Information Center (EPIC) and Harvard Information Infrastructure Project (HIIP) will host two panel discussions. Registration begins at 8:00 AM. Opening addresses by Deborah Hurley (HIIP), Marc Rotenberg (EPIC), and John Anderson begin at 8:15 AM. The first panel, titled "The Internet and Jurisdiction", begins at 8:30 AM. The second panel titled "Privacy and Global Society", begins at 9:15 AM. Location: National Press Club, First Amendment Lounge, 529 14th St. NW, 13th Floor, Washington DC.
8:30 AM. The EPIC and HIIP will host an academic panel discussion on jurisdictional questions brought about by Internet commerce. The speakers will be:
  Julie Cohen (Georgetown University Law Center).
  Jamie Boyle (Duke University School of Law).
  Dave Farber (University of Pennsylvania).
  Michael Geist (University of Ottawa Law School).
  Pam Samuelson (University of California at Berkeley).
  Barbara Simons (Association for Computing Machinery).
9:15 AM. The EPIC and HIIP will host an academic panel discussion on the prospects for global privacy protection by both legal and technological means. The speakers will be:
  Anita Castellitto (University of Pennsylvania School of Law).
  Simon Davies (Privacy International).
  Whitfield Diffie (Sun Microsystems).
  Oscar Gandy (University of Pennsylvania).
  Austin Hill (Zero-Knowledge Systems).
  Robert Ellis Smith (Privacy Journal).
  Paul Schwartz (Brooklyn Law School).
Bell News
5/31. BellSouth requested permission from the Florida Public Service Commission to provide long distance service in Florida. See, release.
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