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October 21, 2004, 9:00 AM ET, Alert No. 1,001.
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7th Circuit Rules on Class Certification in Railroad Rights of Way Case

10/19. The U.S. Court of Appeals (7thCir) issued its split opinion [11 pages in PDF] in Smith v. Sprint, a class action lawsuit involving claims of wrongful installation of fiber optic cable across plaintiffs' lands. This opinion pertains to class certification.

The plaintiffs are landowners whose property is subject to railroad rights of way, along which defendant telecommunications companies installed fiber optic cables without the landowners' permission. They filed a complaint in the U.S. District Court (NDIll), also seeking nationwide class certification. However, other related actions brought by similarly situated plaintiffs have been brought in state courts in Tennessee and Kansas. State courts have certified those classes.

The state plaintiffs, who intervened in this federal action, oppose federal nationwide certification, as it would preclude their separate lawsuits, and hence, decrease their awards.

The District Court certified a nationwide class, for settlement only, and enjoined all competing class actions.

A three judge panel of the Court of Appeals vacated the District Court's nationwide class certification and injunction, and remanded. The Appeals Court reasoned that the plaintiffs in the state actions are inadequately represented by the nationwide plaintiffs, and hence, the requirements of Rule 23, Federal Rules of Civil Procedure, are not met. The majority further stated that the nationwide certification could result in unfairness to the state plaintiffs.

Judge Cudahy wrote a strenuous dissent. He argued that the state plaintiffs are adequately represented by the nationwide class. He wrote that "there are no disparate personal injuries. Plaintiffs' and all class members’ claims arise from defendant’s installation and maintenance of fiber-optic cable on railroad rights of way. Any harm rising from that installation has occurred and is capable of being ascertained. All class members also raise the same legal claims. Therefore, the class has sufficient unity for settlement class certification purposes."

Judge Cudahy also considered national communications policy. He wrote that "The development involved here is the laying of a 36,000-mile network of transcontinental fiber-optic cables crossing many states to provide a national telecommunications grid. This installation of fiber-optic cables becomes part of the national communications infrastructure, having an important value for the national economy as well as for national security."

"The state-by-state treatment favored by the majority is likely to produce a nightmare of complexity, the inequitable treatment of landowners in different states and increased charges to telephone users everywhere", wrote Cudahy.

The Judges also engaged in a little hyperbole. Judge Cudahy claimed that "If a similar approach had been applied to the construction of the first transcontinental railroad, the Pony Express might still be galloping along." To which Judge Evans replied, "the Pony Express might well be still galloping along if class-action lawyers were on the prowl in the 1830's."

Judge Cudahy also mocked the majority's assertion that the nationwide settlement might be unfair to the Tennessee and Kansas plaintiffs. He wrote that "these landowners were not going to build a retirement cottage lying three feet below the railroad tracks on their property -- and, if they were, it is unlikely that this settlement agreement will prevent them from doing so."

This case is Wayne Smith, et al. v. Sprint Communications Company, et al., App. Ct. Nos. 03-3087, 03-3140, 03-3659 & 03-3660, appeals from the U.S. District Court for the Northern District of Illinois, Eastern Division, D.C. No. 99 C 3844, Judge Wayne Andersen presiding. Judge Evans wrote the opinion of the Court, in which Judge Kanne joined. Judge Cudahy wrote a dissent.

Court of Appeals Affirms Zero Arbitration Award in Theis v. Brown & Bain

10/20. The U.S. Court of Appeals (9thCir) issued its opinion in Theis Research v. Brown & Bain, affirming the District Court's confirmation of an arbitration award.

In previous patent related litigation, Brown & Bain represented Theis Research. The litigation did not turn out well. Theis then demanded arbitration of claims against Brown & Bain for legal malpractice, breach of fiduciary duty, fraud and breach of contract. The arbitrator awarded nothing to either party.

Theis then filed a complaint in U.S. District Court (NDCal) against Brown & Bain seeking to vacate the arbitration award, and seeking damages for malpractice, fraud and breach of fiduciary duty. Theis asserted federal jurisdiction based upon diversity of citizenship. Brown & Bain did not contest the subject matter jurisdiction of the District Court.

The District Court did not raise subject matter jurisdiction sua sponte. The District Court denied Theis' motion to vacate the arbitration award, denied Theis' motion for summary judgment, granted Brown & Bain's motion to confirm the arbitration award, and granted summary judgment to Brown & Bain. Theis appealed.

The Court of Appeals raised the jurisdictional issue. That is, the arbitration award was zero, but diversity jurisdiction also requires a minimum amount in controversy of $75,000.

28 U.S.C. § 1332(a) provides, in part, that "The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between -- (1) citizens of different States ..."

However, the Appeals Court held that "the amount at stake in the underlying litigation, not the amount of the arbitration award, is the amount in controversy for purposes of diversity jurisdiction, and thus the district court had jurisdiction under 28 U.S.C. § 1332."

The Appeals Court went on to affirm the District Court judgment. It wrote that "Having submitted the claim to the arbitrator, Theis could seek vacatur of the arbitral result only if it was a manifest disregard of the law, ... an implausible interpretation of the contract, ... the award was procured by corruption, fraud, or undue means, ... or the arbitrator exceeded his powers". And, none of these grounds was supported by the record.

This case is Theis Research, Inc. v. Brown & Bain, U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 02-16839, an appeal from the U.S. District Court for the Northern District of California, D.C. No. CV-99-20645-RMW, Judge Ronald Whyte presiding. Judge David Thompson wrote the opinion of the Court of Appeals, in which Judges Stephen Trott and Charles Weiner joined.

PPI Hosts Panel Discussion of Technology, Due Process, and Privacy

10/20. The Progressive Policy Institute (PPI) hosted a panel discussion titled "Privacy vs. Security: A False Choice?". The speakers were Paul Rosenzweig, a Senior Legal Research Fellow at the Heritage Foundation, David Sobel, the General Counsel of the Electronic Privacy Information Center (EPIC), and Robert Atkinson, Director of the PPI's Technology and New Economy Project.

David Sobel

David Sobel (at right) spoke about the Defense Advanced Research Projects Agency's (DARPA) former Total Information Awareness (TIA) program, and the Department of Homeland Security's (DHS) Transportation Security Administration's (TSA) Computer Assisted Passenger Prescreening System II (CAPPS II) program, and its successor, Secure Flight, all of which involve databasing of information, and analysis of that data to make predictive assessments about individuals.

He argued that databases and information technology can be employed for valid predictive analysis of credit risks by financial institutions. However, he questioned the validity of predictive analysis in the context of anti-terrorism. He said that "predicting terrorist inclinations is problematic".

He also argued these government systems can make false assessments, and hence, individuals should be entitled to certain due process like protections. He cited the examples of Rep. Don Young (R-AK) and Sen. Ted Kennedy (D-MA), who have been questioned by airport security because their names are similar persons on a government list.

He said that without due process like protections, these systems violate the principles of presumption of innocence and probable cause.

Sobel argued that the Privacy Act of 1974 should provide the model. It pertains to government systems of records. It provides a judicially enforceable right to access information that the government maintains about an individual, and the right to seek expungement or correction.

However, Sobel noted that the Privacy Act also allows agencies to exempt their systems, and the DHS's TSA has exempted itself for maintaining the CAPPS II and Secure Flight program.

Paul Rosenzweig responded that there is a change underway from the law enforcement model of reaction to past crimes, to the anti-terrorism model of predicting future acts. He argued that the due process rights that are applied in the context prosecution of crimes cannot be moved into the national security system.

He said that the sort of access to information that Sobel seeks would lead to disclosures that compromise confidential sources, and would give terrorists knowledge of how to evade detection by these systems.

He also complained that the activities of privacy advocacy groups has had a negative effect. For example, he said that some former government programs have been not been shut down, but have rather merely been moved from the government sector where they are subject to oversight, to the private sector, where they are not. He added that some companies providing national security services to the government are even incorporating offshore.

Rosenzweig advocated "a more calibrated transparency". He cited several possible procedures as substitutes for the due process type rights advocated by Sobel. He listed "prior review by a third party" such as a judge, creation of a civil liberties and privacy board, routine audits by inspectors general, "punishments for those who misuse the system", and experimentation with new legal structures.

Robert Atkinson moderated the discussion. He also discussed a paper [20 pages in PDF] that he co-authored last month titled "Technological Innovation Without Big Brother". It concludes that "with the right rules and safeguards in place, government can increase its use of advanced information technology tools and realize significant benefits for society as a whole without causing unacceptable harms to the privacy of citizens."

More News

10/20. The Government Accountability Office (GAO) released a report [70 pages in PDF] titled "Transportation Security R&D: TSA and DHS Are Researching and Developing Technologies, but Need to Improve R&D Management". This report contains a brief summary of the CAPPS II program. It states that "CAPPS II is intended to identify terrorists and other high-risk individuals before they board commercial airplanes. Originally, TSA intended to conduct a risk assessment of each passenger using national security information, commercial databases, and information provided by the passenger during the reservation process -- specifically, the passenger’s name, date of birth, home address, and home telephone number. In our February 2004 report on CAPPS II, we found that TSA was behind schedule in testing and developing initial increments of CAPPS II and had not yet completely addressed other issues, including concerns about privacy and the accuracy of the data used for CAPPS II. In August 2004, a DHS official said that DHS was revising the program with an emphasis on fully protecting passengers’ privacy and civil liberties." (Footnotes omitted.)

10/20. The Department of Justice (DOJ), the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA), CourTV, and other entities hosted a forum for students on intellectual property theft. See, DOJ release.

Washington Tech Calendar
New items are highlighted in red.
Thursday, October 21

The House is in recess until November 16, 2004. See, Republican Whip Notice.

The Senate is in recess until November 16, 2004.

9:00 - 10:00 AM. The Federal Communications Commission's (FCC) Wireless Telecommunications Bureau (WTB) will hold a mock spectrum auction. For more information, contact Lauren Patrich at 202 418-7944 or Location: McKinley Technology High School, 151 T St., NE.

9:30 AM. The U.S. Court of Appeals (DCCir) will hear oral argument in In Re AT&T, No. 03-1397. Judges Ginsburg, Sentelle and Randolph will preside. Location: Prettyman Courthouse, 333 Constitution Ave., NW.

12:00 NOON. The Heritage Foundation will host a panel discussion titled "Secure Flight: Screening for Terrorists on Passenger Planes". The speakers will be Justin Oberman (Transportation Security Administration), Lisa Dean (TSA), and Paul Rosenzweig (Heritage). See, notice. Location: 214 Massachusetts Ave., NE.

12:15 PM. The Federal Communications Bar Association's (FCBA) Cable Practice Committee will host a brown bag lunch. Jeffrey Carlisle, Chief of the Federal Communications Commission's (FCC) Wireline Competition Bureau will speak on "VOIP and Cable". RSVP to Frank Lloyd 202 434-7309 or Location: 9th Floor, Mintz Levin, 701 Pennsylvania Ave., NW.

4:00 PM. Michael Carrier (Rutgers University Law School) will present a paper titled "Cabining Intellectual Property Through a Property Paradigm" at an event hosted by the Dean Dinwoodey Center for Intellectual Property Studies at the George Washington University Law School (GWULS). For more information, contact Robert Brauneis at 202 994-6138 or The event is free and open to the public. See, notice. Location: GWULS, Faculty Conference Center, Burns Building, 5th Floor, 716 20th St., NW.

5:30 - 7:30 PM. The DC Bar Association's Intellectual Property Law Section will host an event titled "Intellectual Property Law Section Fall Reception". See, notice. Prices vary from $25 - $50. For more information, call 202 626-3463. Location: The Club at Franklin Square, 1300 Eye Street, NW, Lobby Level.

6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host the first part of a two part continuing legal education (CLE) seminar on Homeland Security. Prices vary. See, notice. Location: FCC, Commission Meeting Room, 445 12th St., SW.

Friday, October 22

12:15 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host a brown bag lunch. Harry Martin (President of the FCBA) and Michele Farquhar (President-Elect of the FCBA) will speak on involvement in the FCBA and building a career in communications law. For more information, contact Jason Friedrich at or Pam Slipakoff at Location: Drinker Biddle & Reath, 1500 K Street NW, Suite 1100.

LOCATION CHANGE. 12:30 - 2:00 PM. The Congressional Internet Caucus Advisory Committee, the Federal Trade Commission (FTC), and the National Cyber Security Alliance (NCSA) will host a panel discussion titled "Computer Security: What Your Constituents Need to Know". The speakers will be FTC Commissioner Orson Swindle, Susan Koehler (Microsoft), Martha Lockwood, (NCSA), and Wendy Tazelaar ( Lunch will be served. Registration is required; contact or 202 638-4370. Location: Cannon Caucus Room.

Monday, October 25

Day one of a five day conference hosted by the Office of the Secretary of Defense (OSD) Networks and Information Integration (NII) and the Joint Chiefs of Staff titled "7th Annual DoD Spectrum Management Conference". See, notice. Location: Radisson Hotel, Annapolis, Maryland.

Tuesday, October 26

9:30 AM. The Department of Commerce's (DOC) Bureau of Industry and Security's (BIS/BXA) Sensors and Instrumentation Technical Advisory Committee (SITAC) will hold a partially closed meeting. The agenda includes discussion of Wassenaar Export Group proposals on semiconductor lasers and cameras. See, notice in the Federal Register, October 8, 2004, Vol. 69, No.195, at Page 60352. Location: Room 3884, DOC, 14th Street between Constitution and Pennsylvania Aves., NW.

Day two of a five day conference hosted by the Office of the Secretary of Defense (OSD) Networks and Information Integration (NII) and the Joint Chiefs of Staff titled "7th Annual DoD Spectrum Management Conference". See, notice. Location: Radisson Hotel, Annapolis, MD.

Deadline to submit reply comments to the Library of Congress in response to its notice of proposed rulemaking (NPRM) regarding continuation, with a few modifications, of the procedures adopted by the Copyright Office in 1995 that permit copyright applicants to request reconsideration of decisions to refuse registration. See, notice in the Federal Register, July 13, 2004, Vol. 69, No. 133, at Pages 42004 - 42007.

Wednesday, October 27

10:00 AM - 3:00 PM. The Federal Communications Commission's (FCC) Technology Advisory Council will meet. The topic will be ultrawideband (UWB) technology. See, FCC notice [PDF], and notice in the Federal Register, September 28, 2004, Vol. 69, No. 187, at Page 57915. Location: FCC, 445 12th St. SW., Room TW-C305.

2:00 - 4:00 PM. The Department of State's Telecommunication Advisory Committee (ITAC) will meet. See, notice in the Federal Register, October 14, 2004, Vol. 69, No. 198, at Page 61066.

Day three of a five day conference hosted by the Office of the Secretary of Defense (OSD) Networks and Information Integration (NII) and the Joint Chiefs of Staff titled "7th Annual DoD Spectrum Management Conference". See, notice. Location: Radisson Hotel, Annapolis, MD.

Deadline to submit comments to the Department of Commerce's Technology Administration in response to its request for comments regarding the recycling of electronics equipment, such as flat panel monitors. See, TA notice.

Thursday, October 28

Day four of a five day conference hosted by the Office of the Secretary of Defense (OSD) Networks and Information Integration (NII) and the Joint Chiefs of Staff titled "7th Annual DoD Spectrum Management Conference". See, notice. Location: Radisson Hotel, Annapolis, Maryland.

8:30 - 11:30 AM. The Software and Information Industry Association (SIIA) will host a seminar titled "Software Licensing Best Practices Seminar Series: Licensing (and Other) Issues in Software Distribution". See, notice. Prices vary. Location: Mintz Levin, 12010 Sunset Hills Road, Suite 900 Reston, Virginia.

2:00 - 4:00 PM. The Federal Communications Commission's (FCC) WRC 07 Advisory Committee's Informal Working Group 3: IMT-2000 and 2.5 GHz Sharing Issues, will meet. See, FCC notice [PDF]. Location: FCC, 445 12th Street, SW, South Conference Room (8th Floor, Room 8-B516).

6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host the second part of a two part continuing legal education (CLE) seminar on Homeland Security. Prices vary. See, notice. Location: FCC, Commission Meeting Room, 445 12th St., SW.

Friday, October 29

Day five of a five day conference hosted by the Office of the Secretary of Defense (OSD) Networks and Information Integration (NII) and the Joint Chiefs of Staff titled "7th Annual DoD Spectrum Management Conference". See, notice. Location: Radisson Hotel, Annapolis, Maryland.

Deadline to submit comments to the Federal Communications Commission (FCC) in response to its notice of proposed rulemaking (NPRM) regarding the Emergency Alert System (EAS). The FCC adopted this NPRM at its August 4, 2004 meeting, and released it on August 12, 2004. This NPRM is FCC 04-189 in EB Docket No. 04-296. See, notice in the Federal Register, August 30, 2004, Vol. 69, No. 167, at Pages 52843 - 52847.

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