Tech Law Journal Daily E-Mail Alert
February 12, 2003, 9:00 AM ET, Alert No. 602.
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9th Circuit Rules in Challenge to AT&T Consumer Services Agreement
2/11. The U.S. Court of Appeals (9thCir) issued its opinion [42 pages in PDF] in Ting v. AT&T, a class action lawsuit challenging provisions of AT&T's Consumer Services Agreement (CSA) as a violation of California law. The District Court rejected a federal Communications Act preemption defense, and enjoined certain provisions of the CSA, including its ban on class actions. The Appeals Court affirmed in part and reversed in part.

AT&T mass mailed a CSA to customers in 2000. Its Section 4 limited AT&T’s liability for claims other than negligence to the amount of charges for service during the affected period and precludes liability for punitive, reliance, special, and consequential damages. Its Section 7(a) mandated binding arbitration and bans all class wide dispute resolution. It also contains a secrecy provision for all arbitration proceedings and requires consumers to bring all claims within a two year limitations period. It also stated that continuing to receive AT&T service constitutes agreement to the terms of the CSA. It was drafted and distributed in a manner that was designed to minimize the number of customers that would read or understand it.

Darcy Ting, an AT&T customer, on behalf of other similarly situated class members, and Consumer Action, filed a complaint in U.S. District Court (NDCal) against AT&T alleging that certain provisions of AT&T's CSA violate California's Consumer Legal Remedies Act (CLRA) and Unfair Practices Act. AT&T denied these allegations, and further asserted that California law is preempted by the Communications Act and the filed rate doctrine, and the Federal Arbitration Act (FAA). The District Court held that certain provisions of the CSA are unconscionable, and in violation of California law, and enjoined their enforcement. It rejected the Communications Act preemption claim.

The Appeals Court also rejected the Communications Act preemption argument, following a lengthy discussion. It also affirmed the District Court's holding on some points, but reversed on others. For example, it affirmed the holding that the legal remedies provisions of the CSA are unenforceable as unconscionable. It also concluded that the "FAA preempts the CLRA's antiwaiver provision. We therefore reverse the district court's conclusion that the CLRA renders void the CSA's class action ban and two-year limitations period. Because the district court did not find the two-year limitations period unconscionable, this aspect of the CSA is revived. The other provisions remain unenforceable as originally drafted."

USTR Makes Proposals for FTAA
2/11. The office of the U.S. Trade Representative (USTR) announced that it has made an offer in the negotiations for the Free Trade Area of the Americas. The offer includes provisions pertaining to information technology, telecommunications, and e-commerce. See, USTR release and summary of proposal [4 pages in PDF].

Robert ZoellickUSTR Robert Zoellick (at right) stated that "The U.S. is already a very open market. The FTAA will benefit American farmers, workers, consumers and businesses by reducing high tariffs and trade barriers throughout the rest of the Western Hemisphere, while promoting regional economic growth and integration."

The USTR stated in its summary that the proposal includes "Immediate, reciprocal elimination of tariffs offered in key sectors such as ... electrical equipment, ... information technology ..."

The USTR summary also states that "Liberalized services and investment would support development of critical infrastructure in FTAA economies, such as strong banking and financial systems, modern telecommunications and e-commerce networks, and more efficient distribution systems."

It continues that "The U.S. offers are comprehensive in scope and substance. Market access opportunities would be provided across the U.S. services and investment regime unless a specific reservation is taken. The U.S. offers, and will seek from others, broad market access including but not limited to such areas as: Financial services ... Telecommunications services ... Computer and related services ..."

Greenspan Discusses Role of Flexibility, Info Tech & Innovation in Economy
2/11. Federal Reserve Board (FRB) Chairman Alan Greenspan testified before the Senate Banking Committee on monetary policy. He also presented the FRB's semiannual Monetary Policy Report to the Congress. See, prepared testimony.

He stated that "growth of economic activity slowed markedly late in the summer and in the fourth quarter, continuing the choppy pattern that prevailed over the past year. According to the advance estimate, real GDP expanded at an annual rate of only 3/4 percent last quarter after surging 4 percent in the third quarter."

Alan GreenspanGreenspan (at right) also addressed the long term. He said that "the most significant lesson to be learned from recent American economic history is arguably the importance of structural flexibility and the resilience to economic shocks that it imparts." He elaborated that the "increased flexibility has been in part the result of the ongoing success in liberalizing global trade, a quarter century of bipartisan deregulation that has significantly reduced rigidities in our markets for energy, transportation, communication, and financial services, and, of course, the dramatic gains in information technology that have markedly enhanced the ability of businesses to address festering economic imbalances before they inflict significant damage. This improved ability has been facilitated further by the increasing willingness of our workers to embrace innovation more generally."

He added that "the benefits appear sufficiently large that we should be placing special emphasis on searching for policies that will engender still greater economic flexibility and dismantling policies that contribute to unnecessary rigidity. The more flexible an economy, the greater its ability to self-correct in response to inevitable, often unanticipated, disturbances, thus reducing the size and consequences of cyclical imbalances. Enhanced flexibility has the advantage of adjustments being automatic and not having to rest on the initiatives of policymakers, which often come too late or are based on highly uncertain forecasts."

Greenspan also mentioned that "Investment in equipment and software is estimated to have risen at a 5 percent rate in real terms in the fourth quarter and a subpar 3 percent over the four quarters of the year."

9th Circuit Affirms in Oracle v. Falotti
2/11. The U.S. Court of Appeals (9thCir) issued its opinion [17 pages in PDF] in Oracle v. Falotti, a dispute regarding whether a former employee is entitled unvested stock options, or stock option damages.

Oracle hired Pier Carlo Falotti in July 1996 to be Senior Vice President for Europe, the Middle East, and Africa. Oracle terminated him on May 31, 2000. Oracle and Falotti signed an agreement in 1996 that provided that Oracle would grant him an option, over time and in specified periodic installments, to purchase an initial 600,000 shares of Oracle common stock. The agreement also provided that Oracle could terminate his employment with or without cause. Oracle terminated Falotti four months before he was scheduled to vest his remaining stock options worth more than $85 Million.

Oracle filed a complaint in U.S. District Court (NDCal) against Falotti in July 2000 seeking a declaratory judgment that Falotti is neither entitled to vest these stock options nor to receive their value as damages. Falotti defended and counterclaimed. The District Court granted summary judgment to Oracle. The Appeals Court affirmed.

Tech Crime and Fraud Report
2/10. Condor Systems, Inc. plead guilty in U.S. District Court (NDCal) to two felony counts of making false statements to U.S. government officials, in violation of 18 U.S.C. § 1001. Condor submitted false information in applications for export licenses for software. Condor was also sentenced to three years probation, and ordered to pay a fine of $1 Million. See also, story titled "Condor Systems Charged With Making False Statements About Software in Export Application" in TLJ Daily E-Mail Alert No. 579, January 9, 2003; January 8, 2003 felony information [7 page PDF scan]; and February 10, 2003 release of the U.S. Attorney's Office (USAO) for the Northern District of California.

2/7. The Securities and Exchange Commission (SEC) filed a civil complaint in U.S. District Court (SDFl) against Marc Shiner and others alleging violation of federal securities laws in connection with their "ongoing, fraudulent, unregistered offer and sale of securities" in six limited liability partnerships that were ostensibly formed to operate competitive local telephone exchange carriers (CLECs) in states where Qwest Communications is an incumbent local exchange carrier (ILEC). The complaint alleges sale of unregistered securities in violation of §§ 5(a) and 5(c) of the Securities Act, fraud in violation of § 17(a) of the Securities Act, and fraud in violation of § 10(b) of the Exchange Act and Rule 10b-5 thereunder, fraud in violation of § 15(c) of the Exchange Act , and acting as an unregistered broker dealer in violation of § 15(a) of the Exchange Act. The District Court granted a temporary restraining order. See also, SEC release.

People and Appointments
2/10. The Senate confirmed several nominees to be U.S. District Court Judges by unanimous roll call votes. John Adams (Ohio) was approved by a vote of 91-0. See, Roll Call No. 31. James Otero (California) was approved by a vote of 94-0. See, Roll Call No. 32. Robert Junell (Texas) was approved by a vote of 91-0. See, Roll Call No. 33.

2/11. The Senate continues its consideration of Miquel Estrada. President Bush stated in a release that "Last week, the Senate began floor consideration of the nomination of Miguel Estrada to the D.C. Circuit Court of Appeals. Mr. Estrada's nomination was first submitted to the Senate in May 2001 -- almost two years ago. Miguel Estrada is a well-qualified and well-respected nominee who enjoys the bipartisan support of a majority of Senators. Fairness demands that he receive an up-or-down vote on the Senate floor. I urge the Senate to act quickly and allow for an up-or-down vote on this worthy candidate." President Bush also stated at a White House event that "He has the votes necessary to be confirmed. Yet a handful of Democrats in the Senate are playing politics with his nomination. And it's shameful politics." See, transcript.

More News
2/11. The Department of Commerce's (DOC) National Telecommunications and Information Administration (NTIA) announced in a release that eligibility for .edu domain names will be expanded to include more postsecondary institutions than are currently eligible. Eligibility will be expanded from postsecondary degree granting institutions accredited by one of the six U.S. regional accrediting agencies, to also include institutions accredited by agencies on the Department of Education's list of nationally recognized accrediting agencies. See also, Educause release.

2/11. February 11 was National Inventors Day. The Senate passed a resolution, SRes 49, on February 10, recognizing that "the American people and the world have benefited from the creations and discoveries of America's inventors; and ... the patents that protect those creations and discoveries spur technological progress, improve the quality of life, stimulate the economy, and create jobs for Americans". Sen. Patrick Leahy (D-VT), the ranking Democrat on the Senate Judiciary Committee, which has jurisdiction over intellectual property matters, stated in the Senate that "Today's inventors are individuals in a shop, garage or home lab. They are teams of scientists working in our largest corporations or at our colleges and universities. In the spirit of independent inventors, small businesses, venture capitalists and larger corporations in Vermont and all over the United States, I would like to recognize February 11, 2003, as ``National Inventors' Day.´´'' See, Cong. Record, Feb. 10, 2003, at S2124.

2/11. Rep. Richard Baker (R-LA) and Rep. Mike Oxley (R-OH) introduced HR 658 [2 pages in PDF], the Accountant, Compliance and Enforcement Staffing Act, a bill to enable the Securities and Exchange Commission (SEC) to more easily hire certain professionals. Specifically, it provides that "All accountant, economist, and securities compliance examiner positions in the Securities and Exchange Commission shall be excepted from the competitive service, as defined in section 2102 of title 5, United States Code. An employee who is in the competitive service at the time his or her position becomes excepted from the competitive service under this paragraph shall be considered as continuing in the competitive service as long as he or she continues to occupy such position."

2/11. Herschel Abbott, BellSouth's VP for governmental affairs, commented on the Federal Communications Commission's (FCC) one week delay in announcing its Report and Order in its Triennial Review of the unbundling requirements of incumbent local exchange carriers (ILEC) and other matters. He said, in part, that "The practical effect of the delay is small, it allows us a few more days to make our case and we will take that opportunity. The postponement really tells us that there is no three-vote majority for any proposal." The FCC is now scheduled to make its announcement on February 20.

Wednesday, February 12
The House will meet at 10:00 AM for legislative business; the agenda includes consideration of HR 395, The Do-Not-Call Implementation Act.

9:30 AM. The Senate Judiciary Committee will hold a hearing on judicial nominations. The agenda includes Timothy Tymkovich (U.S. Court of Appeals for the Tenth Circuit), Daniel Breen (U.S.D.C., W.D. Tenn.), Thomas Varlan (U.S.D.C., E.D. Tenn.), William Steele (U.S.D.C., S.D. Alabama), Marian Horn (Court of Federal Claims), and Timothy Stanceu (Court of International Trade). See, notice. Location: Room 226, Dirksen Building.

10:00 AM. Federal Reserve Board Chairman Alan Greenspan will testify before the House Financial Services Committee on monetary policy and the state of the economy. Location: Room 2128, Rayburn Building.

10:00 AM to 12:00 NOON. The Federal Communications Commission's (FCC) Office of Engineering and Technology (OET) will host a tutorial titled "Feature Detection and Listen Before Talk Systems", which have possible applications for unlicensed systems. John Betz of the Mitre Corporation will speak. See, notice. Location: FCC, Commission Meeting Room (TW-C305), 445 12th Street SW.

11:30 PM. Rep. Chris Cox (R-CA), Chairman of the House Select Committee on Homeland Security, and Rep. Jim Turner (D-TX), the ranking Democrat, will hold a press conference. They will announce the membership of the Committee, and review its oversight and legislative agenda. Press contact: Kate Whitman at 202 225-5611. Location: House Radio & TV Gallery (H-321), Capitol Building.

12:00 PM (approximate time). The Senate Finance Committee will hold a hearing on several nominations, including that of Charlotte Lane to be a member of the U.S. International Trade Commission. This hearing will commence immediately after the conclusion of the 9:30 AM Committee hearing on proposals for economic growth. See, notice [PDF]. Location: Room 215, Dirksen Building.

1:00 - 5:00 PM. The National Telecommunications and Information Administration (NTIA) will host an event titled "Voice Over Internet Protocol (VoIP) Roundtable". The NTIA stated in a notice that the event will address VoIP "and the convergence of the Internet and the public switched telephone network. The roundtable will include an overview of VoIP technology, including a brief demonstration of the Commerce Department's new VoIP telephone system." There will also be two panel discussions. See, agenda. The event will be webcast. Location: Department of Commerce, 1401 Constitution Avenue, NW, Room 4830.

5:00 - 7:00 PM. The Congressional Internet Caucus will hold its "6th Annual Kickoff Reception & Technology Fair". The schedule includes brief statements by the Internet Caucus Chairmen, Sen. Conrad Burns (R-MT), Sen. Patrick Leahy (D-VT), Rep. Bob Goodlatte (R-VA), and Rep. Rick Boucher (D-VA), and by Timothy Muris, Chairman of the Federal Trade Commission (FTC) and Howard Schmidt, Acting Chairman of the President’s Critical Infrastructure Security Board. There will also be technology demonstrations by Advanced Biometric Systems, E-Gov OS, Full Audio (music downloads), MovieLink, NTT DoCoMo (3G), Proxim (WiFi), University of Virginia (telemedicine), and Xybernaut. Location: Room 902, Hart Senate Office Building.

Thursday, February 13
The House will meet at 10:00 AM for legislative business.

9:00 AM - 2:00 PM. The American Enterprise Institute (AEI) will host a conference titled "Tax, Trade, and Cowboy Capitalism in the United States and Europe". Rep. Bill Thomas (R-CA), Chairman of the House Ways and Means Committee, will give a keynote address at 9:00 AM. There will be three panel discussions. Finally, Sen. Max Baucus (D-MT), the ranking Democrat on the Senate Finance Committee, will give the luncheon address at 1:00 PM. Location: AEI, 1150 Seventeenth St., NW.

9:15 AM. The Senate Commerce Committee will hold its organizational meeting for the 108th Congress. See, notice. Press contact: Pia Pialorsi (McCain) at 202 224-2670. Location: Room 253, Russell Building.

POSTPONED TO FEBRUARY 20. 9:30 AM. The Federal Communications Commission (FCC) will hold a meeting. See, agenda. Location: FCC, 445 12th Street, SW, Room TW-C05 (Commission Meeting Room).

9:30 - 11:30 AM. The Federal Communications Commission's (FCC) Office of Engineering and Technology (OET) will sponsor several technology demonstrations of ultra-wideband devices. One of the participants will be Xtreme Spectrum (XS), which will demonstrate a wireless broadcast of two high definition television (HDTV) streams to two separate large screen displays using XS's ultra-wideband chipset Trinity. The FCC stated in a release that FCC staff will "be available to the media at the beginning of the event to address regulatory actions taken by the FCC in this area". Press contacts: David Fiske (FCC) at 202 418-0500 or Diane Orr (XS) at 408 377-0308. See, FCC notice [PDF]. Location: FCC, Commission Meeting Room (TW-C305), 445 12th St., SW.

9:30 AM. The Senate Judiciary Committee will hold an executive business meeting. The agenda includes consideration of several judicial nominees: Deborah Cook (U.S. Court of Appeals for the 6th Circuit), John Roberts (U.S. Court of Appeals for the District of Columbia), Jeffrey Sutton (U.S. Court of Appeals for the Sixth Circuit), Jay Bybee (U.S. Court of Appeals for the Ninth Circuit), Ralph Erickson (U.S.D.C., North Dakota), William Quarles (U.S.D.C., Maryland), Gregory Frost (U.S.D.C., Southern District of Ohio). The agenda also includes consideration of S 113, a bill to exclude United States persons from the definition of "foreign power" under the Foreign Intelligence Surveillance Act (FISA). See, notice. Location: Room SDG 50, Dirksen Building.

10:00 AM. The House Science Committee will hold a hearing on the research and development components of President Bush's FY 2004 proposed budget. The scheduled witnesses are John Marburger (Director of the Office of Science and Technology Policy), Rita Colwell (Director of the National Science Foundation), Samuel Bodman (Deputy Secretary of the Department of Commerce), and Robert Card (Under Secretary of Energy for Energy, Science and Environment). Press contact: Heidi Tringe at Heidi.Tringe or 202 225-4275. Location: Room 2318, Rayburn Building.

2:30 PM. The Senate Commerce Committee will hold a hearing on "infrastructure needs of minority serving institutions". See, S 196, the Digital & Wireless Network Technology Program Act of 2003, a bill to create a grant program for minority serving institutions, sponsored by Sen. George Allen (R-VA). Press contact: Pia Pialorsi (McCain) at 202 224-2670. See, notice. Location: Room 253, Russell Building.

3:00 PM. The House Ways and Means Committee's Subcommittee on Oversight will hold a hearing titled "Free Electronic Filing and National Taxpayer Advocate Annual Report". Location: Room 1100, Longworth Building.

6:00-8:00 PM. The FCBA will host a reception for Federal Communications Commission (FCC) Commissioner Jonathan Adelstein. Tickets to attend must be purchased by February 10. See, purchase form. Location: Mayflower Hotel, Grand Ballroom, 1127 Connecticut Ave., NW.

Friday, February 14
9:30 AM. The Senate Governmental Affairs Committee will hold a hearing to examine the President's proposal to create a terrorist threat integration center, including consolidating intelligence analysis. Location: Room 342, Dirksen Building.

11:00 AM. The Library of Congress (LOC) will announce a plan titled "National Digital Information Infrastructure and Preservation Program" (NDIIPP). The scheduled speakers will include James Billington (Librarian of Congress) and Laura Campbell (Associate Librarian for Strategic Initiatives). For more information, contact Guy Lamolinara at 202 707-9217 or Location: LOC, Mary Pickford Theater, third floor, Madison Building, 1st St. & Independence Ave., SE.

TO BE DECIDED WITHOUT ORAL ARGUMENT. 9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in Moultrie Independent Telephone Company v. FCC, No. 01-1506. Judges Tatel, Garland and Williams will preside. Location: 333 Constitution Ave., NW.

Deadline to submit comments to the U.S. Court of Appeals for the Ninth Circuit regarding the reappointment of Judge Arthur Weissbrodt, U.S. Bankruptcy Judge for the Northern District of California, San Jose Division. His current term expires on December 2, 2003. See, notice [PDF].

12:00 NOON. Deadline to submit comments to the Office of the U.S. Trade Representative (USTR) regarding countries that deny adequate and effective protection of intellectual property rights or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. The USTR is required by Section 182 of the Trade Act of 1974 to make designations, commonly referred to as Special 301 designations, of countries that deny adequate protection, or market access, for IPR. See, 19 U.S.C. § 2242. See also, notice in the Federal Register, December 30, 2002, Vol. 67, No. 250, at Pages 79683 - 79684.

Monday, February 17
Presidents Day. The House will be in recess for the Presidents Day District Work Period from February 17 through 21. The FCC will be closed on February 17.
Tuesday, February 18
9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in AT&T v. FCC, No. 01-1485. Judges Tatel, Garland and Williams will preside. Location: 333 Constitution Ave., NW.

4:00 PM. Michael Meurer (Boston University School of Law) will present a paper titled "Sharing Copyrighted Works". For more information, contact Robert Brauneis at 202 994-6138 or Location: George Washington University Law School, Faculty Conference Center, Burns Building, 5th Floor, 720 20th Street, NW.

Extended deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Proposed Rulemaking (NPRM) [15 pages in PDF] in its proceeding titled "In the Matter of Digital Broadcast Copy Protection". This NPRM proposes that the FCC promulgate a broadcast flag rule, and seeks comment on this, and related questions. This is MB Docket No. 02-230. See, FCC release [PDF] and Order [PDF] of October 11, 2002 extending deadlines. See also, Order [PDF] of January 3, 2003.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Notice of Inquiry (NOI) in the proceeding titled "In the matter of Facilitating the Provision of Spectrum Based Services to Rural Areas and Promoting Opportunities for Rural Telephone Companies To Provide Spectrum Based Services". This is WT Docket No. 02-381. For more information, contact Robert Krinsky at 202 418-0660. See also, notice in the Federal Register, January 7, 2003, Vol. 68, No. 4, at Pages 723 - 730.

Extended deadline to submit comments to the Federal Communications Commission (FCC) in response to its Further Notice of Proposed Rulemaking, (FNPRM), released last month, regarding whether providers of various services and devices not currently within the scope of the FCC's 911 rules should be required to provide access to emergency services. This is CC Docket No. 94-102 and IB Docket No. 99-67. See, notice in the Federal Register, January 23, 2003, Vol. 68, No. 15, at Pages 3214 - 3220, and notice of extension.


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