5/27. The Supreme Court denied certiorari in T-Mobile USA v. Laster, a class action case regarding wireless services. Although, the issue in this certiorari proceeding was enforceability of arbitration clauses in consumer contracts under the Federal Arbitration Act (FAA).

This denial of certiorari lets stand the October 25, 2007, opinion of the U.S. Court of Appeals (9thCir), which held that the arbitration provisions at issue are unenforceable. This is a defeat for the wireless communications industry, and a victory for class action lawyers. The various participants debate the consequences for consumers.

See, Orders List [9 pages in PDF] at page 1, and Supreme Court docket.

The 9th Circuit's opinion is arguably inconsistent with the FAA, which is codified at 9 U.S.C. § 1, et seq., and precedent construing the FAA.

9 U.S.C. § 2 provides, in full, that "A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."

The 9th Circuit rested its holding upon the "save upon" clause of Section 2, and California state law.

The CTIA submitted an amicus brief [26 pages in PDF] urging the Supreme Court to grant certiorari and the reverse the judgment of the 9th Circuit.

It wrote that "virtually all members of the wireless industry ... rely on alternative dispute resolution mechanisms to resolve disputes efficiently and to reduce costs for their customers. Individual arbitration clauses appear in hundreds of millions of subscriber contracts throughout the United States, and virtually all of those arbitration provisions are called into question if the Ninth Circuit's decision survives."

It further argued that "Wireless carriers operate in a highly competitive marketplace, resulting in better services at lower prices for consumers. In that market, there is a premium on maintaining customer loyalty -- carriers have a substantial economic incentive to avoid losing customers. For that reason, most customer disputes are settled at the customer service level, and subscribers who take advantage of individual arbitration procedures are ordinarily satisfied with the outcome. Customers are happy, and the costs of dispute resolution are kept low. The Ninth Circuit’s decision, however, forces carriers to abandon arbitration in favor of class action litigation."

It also asserted that the result of the 9th Circuit's opinion "will be higher costs for carriers and customers alike, leaving the plaintiffs’ bar as the only beneficiary".

There is also legislation pending in the Congress that would render uneforceable arbitration clauses in consumer contracts, including the contracts at issue in the present case.

For example, HR 3010 [LOC | WW], the "Arbitration Fairness Act of 2007", would amend Section 2 to provide "No predispute arbitration agreement shall be valid or enforceable if it requires arbitration of (1) an employment, consumer, or franchise dispute ...".

The 9th Circuit has provided, by judicial opinion, what the proponents of HR 3010 have been unable to obtain from the Congress.

This case is T-Mobile USA, Inc. v. Jennifer Laster, et al., Sup. Ct. No. 07-976, a petition for writ of certiorari to the U.S. Court of Appeals for the 9th Circuit, App. Ct. No.  06-55010.

The Supreme Court also denied certiorari in T-Mobile v. Bruce Gatton, Sup. Ct. No. 07-1036, and in T-Mobile v. Charles Ford, Sup. Ct. No. 07-1103. See, Orders List at page 2.

5/27. The Supreme Court denied certiorari in Stroman Realty v. Martinez, a commerce clause case. See, Orders List [9 pages in PDF] at page 2 and Supreme Court docket.

This lets stand the October 10, 2007, opinion of the U.S. Court of Appeals (7thCir), which affirmed the District Court's dismissal pursuant to the abstention doctrine.

This is another in a series of setbacks to Stroman Realty, which seeks to have the federal courts' adjudicate on the merits its claims that various state regulators are violating the commerce clause of the Constitution.

See also, story titled "5th Circuit Rules No Personal Jurisdiction Over Out of State Regulator of Online Commerce" in TLJ Daily E-Mail Alert No. 1,700, January 15, 2008, and story titled "5th Circuit Rules on Personal Jurisdiction Over State Regulators" in TLJ Daily E-Mail Alert No. 1,768, May 16, 2008.

These and other related cases are significant for internet based businesses that seek federal judicial relief from state regulation that they assert is arbitrary, discriminatory, protectionist, or technophobic.

Stroman Realty, Inc. is a business located in Conroe, Texas. It is an advertiser and resale broker of timeshare intervals in the secondary resale market. Timeshare refers to ownership of property that is divided by time. That is, property has multiple owners, each of which is entitled to use and possession for limited periods of time. This case involves timeshares in real property, such as vacation condos and homes.

While Stroman is located in Texas, the location of the property that is divided into timeshares and brokered by Stroman is located in many states and countries. Moreover, both buyers and sellers are spread around. However, its real estate brokers are licensed by the state of Texas.

State regulators in various states, including Illinois, have attempted to regulate Stroman's activities. Stroman has filed many complaints against distant state regulators alleging violation of the commerce clause of the U.S. Constitution.

Dean Martinez is the current Secretary of the Illinois Department of Financial and Professional Regulation. Stroman filed a complaint in U.S. District Court (NDIll) against his predecessor, Ferdinand Grillo.

The state of Illinois reacted by promptly initiating a related administrative proceeding before the Illinois Office of Banks and Real Estate, and then asserting various arguments for dismissal of the U.S. District Court action.

The District Court dismissed pursuant to the abstention doctrine.

While there is a commerce clause in the Constitution, there is no federal abstention doctrine in the Constitution. Rather, the Supreme Court created it in its 1971 opinion in Younger v. Harris, which is also reported at 401 U.S. 37.

In that case a defendant in a state criminal proceeding filed a complaint in federal court seeking an injunction of the state criminal proceeding. Former Justice Hugo Black wrote that there is a "longstanding public policy against federal court interference with state court proceedings", even though it has "never been specifically identified". He concluded that the doctrine restrains "courts of equity from interfering with criminal prosecutions".

The U.S. Court of Appeals (7thCir) issued its opinion on October 10, 2007, affirming the judgment of the District Court.

The Court of Appeals summarized the holding of Younger v. Harris also follows: "federal courts must abstain from enjoining or otherwise interfering in ongoing state court proceedings that are (1) judicial in nature, (2) involve important state interests, and (3) provide an adequate opportunity to raise the federal claims, as long as (4) no exceptional circumstances exist that would make abstention inappropriate."

It then held that the doctrine of Younger v. Harris applies to Stroman's District Court action.

There are, however, significant differences between Younger v. Harris and the Stroman case. The former case involved an attempt to interfere with an ongoing criminal court proceeding. When Stroman filed, there was no ongoing proceeding. Stroman's action interfered with nothing. Illinois initiated a proceeding in order to assert interference with an ongoing proceeding.

Moreover, in Stroman, once the state initiated an action, it was neither criminal nor in court.

Although, other federal courts have similarly relaxed the requirements for application of the doctrine of Younger v. Harris.

The tactic employed by Illinois in this case may serve to delay, inconvenience, and raise the litigation costs of, distant plaintiffs. However, it does not ultimately evade judicial review.

Stroman, and other similarly situated plaintiffs, can present evidence and arguments related to their federal constitutional claims in the state proceeding. Then, if a hostile administrative agency rejects their claims, they can seek judicial review. Younger v. Harris goes to interference with ongoing state trial court proceedings, not judicial review of final orders in those proceedings.

The Court of Appeals concluded, "We see no reason why Stroman's dormant Commerce Clause claim could not also be adequately addressed on judicial review in the event of an adverse administrative decision."

The 7th Circuit also recently applied the doctrine of Younger v. Harris in a telecommunications case. See, story title "7th Circuit Applies Abstention Doctrine in Automated Phone Call Case" in TLJ Daily E-Mail Alert No. 1,641, September 21, 2007.

The present case is Stroman Realty, Inc. v. Dean Martinez, Sup. Ct. No. 07-1096, a petition for writ of certiorari to the U.S. Court of Appeals for the 7th Circuit, App. Ct. No. 06-3214.

5/27. The U.S. Court of Appeals (9thCir) issued it opinion [6 pages in PDF] in Gerdlinger v. Amazon and Borders, a class action antitrust case. The Court of Appeals affirmed the District Court's dismissal for lack of standing.

Amazon sells books through its web site. Borders sells books at physical stores. Amazon and Borders entered into a marketing agreement in 2001.

The Court of Appeals summarized that "Under the agreement, Borders' website address directs shoppers to what is known as a mirror website, a site hosted by Amazon. The books purchased through the mirror site are sold and shipped by Amazon, and Borders receives a commission for each book sold. The agreement enables Borders to tap the online market and Amazon to expand its customer base to include customers loyal to the Borders brand."

In addition, "Borders abandoned its direct participation in the online market and agreed that it would not reenter the market during the term of the agreement."

The Court added that "the agreement also specified that Amazon would not charge customers of the mirror site higher prices than Amazon charged to customers of its own site."

In this class action, the nominal plaintiff is Gary Gerdlinger. He filed a complaint in U.S. District Court (NDCal) alleging per se market allocation, and per se price fixing, both in violation of Section 1 of the Sherman Act, which is codified at 15 U.S.C. § 1.

Amazon and Borders submitted a declaration showing that the prices for books on the Amazon web site declined after the two entered into their agreement.

Gerdlinger purchased books from Amazon. However, he did not submit evidence showing that he had ever purchased an item for a higher price than he would have paid had there been no marketing agreement.

The District Court concluded that he had suffered no injury in fact, and therefore lacked antitrust standing. It dismissed his complaint with prejudice. The present appeal followed.

The Court of Appeals affirmed.

It wrote that Article III of the U.S. Constitution "requires proof of injury-in-fact, causation, and redressability". It continued that "For Article III purposes, an antitrust plaintiff establishes injury-in-fact when he ``has suffered an injury which bears a causal connection to the alleged antitrust violation.´´ ..." (Citations omitted.)

The Court of Appeals continued that to establish standing, a plaintiff cannot rely solely on allegations in pleadings, but rather must also submit evidence, such as affidavits, regarding the existence of standing.

First, the Court of Appeals addressed standing for the market allocation claim.

While Gerdlinger had alleged in his complaint that he was "forced to pay supra-competitive prices", Amazon and Borders submitted evidence that rebutted this.

"In the face of that evidence," wrote the Court, "Gerlinger needed to show some injury. It became Gerlinger’s burden, in order to defeat the motion, to ``set out specific facts showing a genuine issue for trial.´´ Fed. R. Civ. P. 56(e). Gerlinger failed to satisfy his burden to establish a genuine issue as to whether he suffered an injury-in-fact." He did not do this. "Nor did he show or even allege that he himself experienced any reduced selection of titles, poorer service or any other potentially conceivable form of injury."

Therefore, the Court of Appeals held that he "lacks standing to maintain an antitrust claim for alleged market allocation."

Second, the Court of Appeals addressed the price fixing claim.

The Court of Appeals wrote that the part of the agreement that provided that Amazon would not charge customers of the mirror site higher prices than it charged customers at its own site "looks very much like a lawful joint venture or a licensing agreement to share brand names."

However, it did not decide the price fixing claim on the merits because it concluded that "the plaintiff has not shown any injury-in-fact caused by the agreement, and he therefore lacks Article III standing to bring this claim as well."

This case is Gary Gerdlinger v. Amazon and Borders, U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 05-17328, an appeal from the U.S. District Court for the Northern District of California, D.C. No. CV-02-05238-MHP, Judge Marilyn Patel presiding. Judge Mary Schroeder wrote the opinion of the Court of Appeals, in which Judges Jay Bybee and George Wu joined.

The House will not meet.

The Senate will not meet.

9:00 AM. The U.S. District Court (DC) will hold a status conference in Covad v. Revonet, and breach of contract and misappropriation of trade secrets case involving customer lead information. Location: 333 Constitution Ave., NW.

12:00 NOON. The Cato Institute will host a panel discussion titled "Carrots and Sticks: The Evolving U.S. Economic Policy toward China". The speakers will be James Dorn (Cato) and Daniel Ikenson (Cato). See, notice and registration page. Location: Room B-339, Rayburn Building.

12:00 NOON - 2:00 PM. The DC Bar Association will host a program titled "A New Era for CFIUS: The Proposed Regulations and Their Possible Implications". The speakers will be Louis Rothberg (Associate Counsel for International Cooperative Programs, U.S. Army), Joseph Dennin (McKenna Long & Aldridge), Geoffrey Goodale (Foley & Lardner), Stephen Canner (U.S. Council for International Business), and Nova Daly (Department of the Treasury). The price to attend ranges from $5 to $35. For more information, contact 202-626-3488. See, notice. Location: McKenna Long & Aldridge, 1900 K St., NW.

4:00 - 5:30 PM. The American Enterprise Institute (AEI) will host a panel discussion titled "The Antitrust Burden: Can American Companies Still Compete Fairly Abroad?" The speakers will include Thomas Barnett (head of the Department of Justice's Antitrust Division), Deborah Majoras, Theodore Ullyot (Kirkland & Ellis), and John Yoo (AEI). Location: AEI, 12th floor, 1150 17th St., NW.

6:30 - 8:30 AM. The Federal Communications Bar Association's (FCBA) Young Lawyer's Committee will host an event titled "Happy Hour". For more information, contact Tarah Grant at tsgrant at hhlaw dot com or Krista Witanowski at krista dot witanowski at fcc dot gov. Location: Mandarin Oriental Hotel, Empress Lounge, 1330 Maryland Ave., SW.

The House will not meet.

The Senate will not meet.

12:00 NOON. The Cato Institute will host a panel discussion titled "China's Rise: Is Conflict Unavoidable?". The speakers will be Ted Carpenter (Cato) and Justin Logan (Cato). See, notice and registration page. Location: Room B-339, Rayburn Building.

Deadline to submit comments to the Copyright Office (CO) in response to its notice of proposed rule making (NPRM) regarding online group registration. The CO states that "this Notice proposes to amend further the current regulations governing group registration to require any applicant wishing to take advantage of group registration options to file the group claim electronically within the reengineered registration system". See, notice in the Federal Register, April 30, 2008, Vol. 73, No. 84, at Pages 23390-23393.

Deadline to submit to the U.S. Patent and Trademark Office (USPTO) nominations of individuals or corporations to receive the National Medal of Technology and Innovation. See, notice in the Federal Register, January 24, 2008, Vol. 73, No. 16, at Pages 4181-4182, and USPTO release.

Deadline to submit to the U.S. Patent and Trademark Office (USPTO) nominations of individuals for membership on the Patent Public Advisory Committee and Trademark Public Advisory Committee. See, notice in the Federal Register, April 25, 2008, Vol. 73, No. 81, at Pages 22343-22344.

Deadline to submit reply comments to the Federal Communications Commission (FCC) in response to its Further Notice of Proposed Rule Making regarding public safety communications in the 800 MHz band. The FCC adopted and released this item on March 5, 2008. This item is FCC 08-73 in WT Docket No. 02-55 and ET Docket Nos. 00-258 and 95-18. See, notice in the Federal Register, March 31, 2008, Vol. 73, No. 62, at Pages 16822-16826.

The House will not meet. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

The Senate will return from it Memorial Day recess. See, Senate 2008 calendar.

2:00 - 4:00 PM. The American Enterprise Institute (AEI) will host a panel discussion titled "Is China Taking Unfair Advantage of Its Trade Partners?". The speakers will be Philip Levy (AEI), Scott Paul (Alliance of American Manufacturers), Brad Setser (Council on Foreign Relations), and Desmond Lachman (AEI). See, notice. Location: AEI, 12th floor, 1150 17th St., NW.

6:00 PM. Deadline for upfront payments in the Federal Communications Commission's (FCC) Auction No. 77. See also, notice in the Federal Register, May 8, 2008, Vol. 73, Number 90, at Pages 26112-26118.

The House will return from its Memorial Day recess. Votes will be postponed at least until 6:30 PM. See, Rep. Hoyer's 2008 calendar [4.25 MB PDF].

9:00 AM - 4:30 PM. The Department of Commerce's (DOC) National Institute of Standards and Technology's (NIST) Judges Panel of the Malcolm Baldrige National Quality Award will hold a closed meeting to discuss applicants and award criteria. See, notice in the Federal Register: May 16, 2008, Vol. 73, No. 96, at Page 28433. Location: Administration Building, Lecture Room A, Gaithersburg, MD.

6:30 - 9:00 PM. The DC Bar Association will host a program titled "The Gates Foundation's Global Access Principles: Striking the Balance". The speaker will be Erik Iverson (Gates Foundation Associate General Counsel). The price to attend ranges from $8 to $20. For more information, contact 202-585-9654. See, notice. Location: Finnegan Henderson, 10th floor, 901 New York Ave., NW.

Day one of a two day conference hosted by the National Institute of Standards and Technology (NIST) titled "Applications of Pairing-Based Cryptography: Identity-Based Encryption and Beyond". See, notice. The basic price to attend is $145. Registrations are due by May 27, 2008. Location: NIST, Green Auditorium, 100 Bureau Drive, Gaithersburg, MD.

8:30 AM - 12:00 NOON. The Information Technology Association of America (ITAA) will host a half day conference titled "Level 3 Authentication: When Pin & Password Aren’t Enough". See, notice. Prices vary. Location: JW Marriot Hotel.

TIME? Day one of a two day invitation only conference hosted by the Business Software Alliance (BSA) titled "BSA CEO Forum". See, notice. Location?

1:00 - 5:00 PM. Day one of a three day meeting of the National Institute of Standards and Technology's (NIST) Information Security and Privacy Advisory Board (ISPAB). See, notice in the Federal Register, May 14, 2008, Vol. 73, No. 94, at Page 27797. Location: George Washington University, Dining Room Conference, 1918 F St., NW.

6:00 - 8:15 PM. The Federal Communications Bar Association's (FCBA) International Practice and Privacy and Data Security Committees will host an event titled "Addressing Privacy Issues Abroad: The Global Privacy Framework for Communications and Media Companies". See, registration page. This event qualifies for continuing legal education (CLE) credits. Prices vary. For more information, contact Yaron Dori at ydori at hhlaw dot com or Jennifer Ullman at Jennifer dot ullman at verizon dot com. Location: Hogan & Hartson, 13th floor, West Tower, 555 13th St., NW.

Day two of a two day conference hosted by the National Institute of Standards and Technology (NIST) titled "Applications of Pairing-Based Cryptography: Identity-Based Encryption and Beyond". See, notice. The basic price to attend is $145. Registrations are due by May 27, 2008. Location: NIST, Green Auditorium, 100 Bureau Drive, Gaithersburg, MD.

TIME? Day two of a two day invitation only conference hosted by the Business Software Alliance (BSA) titled "BSA CEO Forum". See, notice. Location?

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its Second Further Notice of Proposed Rulemaking (2ndFNPRM) regarding satellite carriers' carriage obligations under Section 338 of the Communications Act as the high definition (HD) carriage requirement becomes effective. The FCC adopted its Second Report and Order, Memorandum Opinion, and 2ndFNPRM on March 19, 2008, and released the text on March 28, 2008. It is FCC 08-86 in CS Docket No. 00-96. See, notice in the Federal Register, May 5, 2008, Vol. 73, No. 87, at Pages 24515-24519. See also, story titled "FCC Releases DBS HD Carry One Carry All Order" in TLJ Daily E-Mail Alert No. 1,738, March 27, 2008.

8:30 AM - 5:00 PM. Day two of a three day meeting of the National Institute of Standards and Technology's (NIST) Information Security and Privacy Advisory Board (ISPAB). See, notice in the Federal Register, May 14, 2008, Vol. 73, No. 94, at Page 27797. Location: George Washington University, Cafritz Conference Center, Room 310 (Elliott Room), 800 21st St., NW.

3:00 - 5:15 PM. The Federal Communications Bar Association (FCBA) will host a class titled "Essentials of Engineering for Telecommunications Policy Reform". The speaker will be Dale Hatfield. This event qualifies for continuing legal education (CLE) credits. See, notice. Location: Hogan & Hartson, 555 13th St., NW.

6:00 - 8:15 PM. The DC Bar Association will host a program titled "Beyond Smoke-Filled Rooms and Lavish Lunches: Lobbying in the 110th Congress". The speakers will be Irene Bueno (Nueva Vista Group) and Monte Lake (Siff & Lake). The price to attend ranges from $80 to $115. For more information, contact 202-626-3488. This event qualifies for continuing legal education (CLE) credits. See, notice. Location: DC Bar Conference Center, B-1 Level, 1250 H St., NW.

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