TLJ News from August 26-31, 2008

FCC Receives Petitions for Reconsideration of IP Enabled Services Order

8/29. On August 18, 2008, Sorenson Communications, Inc., filed with the Federal Communications Commission (FCC) a Petition for Reconsideration [7 pages in PDF] of the FCC's Report and Order and Further Notice of Proposed Rulemaking, adopted on June 11, 2008, and released on June 24, 2008, in its proceedings regarding Telecommunications Relay Services and Speech to Speech Services for Individuals with Hearing and Speech Disabilities, and E911 Requirement for IP Enabled Service Providers.

On August 15, CSDVRS, LLC, filed a Petition for Reconsideration [5 pages in PDF] of the same item. This R&O and FNPRM is FCC 08-151in CG 03-123 and WC 05-196

Oppositions to these petitions are due by September 15, 2008. Replies to oppositions are due "within 10 days after the time for filing oppositions have expired". See, notice in the Federal Register, August 29, 2008, Vol. 73, No. 169, at Pages 50971-50972.

FTC Amends TSR Regarding Prerecorded Messages and Call Abandonment

8/29. The Federal Trade Commission (FTC) published a notice in the Federal Register that announces, describes, recites, and sets the effective dates for, amendments to its Telemarketing Sales Rule (TSR).

First, these amendments add to the prohibited "Abusive telemarketing acts or practices" "Initiating any outbound telephone call that delivers a prerecorded message ... unless ... in any such call to induce the purchase of any good or service, the seller has obtained from the recipient of the call an express agreement, in writing ..."

The FTC elaborated in a release that "The amendments will not affect consumers' ability to continue to receive calls that deliver purely ``informational´´ prerecorded messages -- notifying recipients, for example, that their flight has been cancelled, that they have a service appointment, or similar messages. Such purely ``informational´´ calls are not covered by the TSR because they do not attempt to sell the called party any goods or services."

Second, the new rule requires that "in any such call to induce the purchase of any good or service, or to induce a charitable contribution from a member of, or previous donor to, a non-profit charitable organization on whose behalf the call is made, the seller or telemarketer" allow the phone to ring for 15 seconds, or for 4 rings, and "in the case of a call that could be answered in person by a consumer, that the person called can use an automated interactive voice and/or keypress-activated opt-out mechanism to assert a Do Not Call request ..." It also requires a related opt-out mechanism for calls answered by machines or voicemail services.

These amendments exempt any "outbound telephone call that delivers a prerecorded healthcare message made by, or on behalf of, a covered entity or its business associate, as those terms are defined in the HIPAA Privacy Rule ..."

Third, these amendments address call abandonment. That is, call centers use systems that place calls, anticipating that a sales representative will be available when the call is answered. When no sales representative is available, the call may be terminated or abandoned, which is annoying and/or disconcerting to consumers.

The new rule requires that "The seller or telemarketer employs technology that ensures abandonment of no more than three (3) percent of all calls answered by a person, measured over the duration of a single calling campaign, if less than 30 days, or separately over each successive 30-day period or portion thereof that the campaign continues."

Different requirements imposed by these amendments become effective on different dates. The maximum 3% call abandonment rate is effective October 1, 2008. The requirement for an opt-out mechanism is effective December 1, 2008. The ban on prerecorded sales calls without written consent is effective September 1, 2009.

See, Federal Register, August 29, 2008, Vol. 73, No. 169, at Pages 51163-51204.

FTC To Hold Public Workshop on Section 5 and Unfair Methods of Competition

8/28. The Federal Trade Commission (FTC) published a notice in the Federal Register announcing that it will hold a public workshop in Washington DC on October 17, 2008, titled "Prohibition of Unfair Methods of Competition In Section 5 of the Federal Trade Commission Act".

This workshop will address the scope of Section 5 of the FTCA, which is codified at 15 U.S.C. § 45, its relation to antitrust statutes, and its application to technology companies.

The FTC proceeded in part under Section 5 in its ill fated JEDEC proceeding against Rambus. See, story titled "Court of Appeals Rules in Rambus v. FTC" in TLJ Daily E-Mail Alert No. 1,752, April 23, 2008.

The FTC also reached consent agreements with Dell in 1996, and with various record industry companies in 2000, based upon its application of Section 5 to competition practices.

Section 5 is a broad and vague statute. It provides in part that "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful." It also contains an exemption for "common carriers".

The FTC also seeks public comments, by October 24, on the following 11 issues:
  "1. What principles concerning the scope of Section 5 can be garnered from Supreme Court and appellate court decisions?
  2. What legal, economic, and policy concerns are important when interpreting Section 5's prohibition against ``unfair methods of competition?'' What is the role of Section 5 in protecting nonprice competition?
  3. Is Section 5 coterminous with the Sherman Act? How has the courts' development of the Sherman Act over time altered its relationship to Section 5? Does the Sherman Act encompass all conduct that is truly harmful to competition?
  4. Does Section 5 authorize the FTC to fill technical gaps in the coverage of the other antitrust statutes?
  5. Can Section 5 reach externally-defined business torts where they threaten to bring about a future lessening of competition?
  6. Should Section 5 be interpreted to reach practices that pose at least a moderate threat to competition and few offsetting benefits to consumers, (e.g., reduced costs, improved products, or other efficiencies), where enforcement is limited to the FTC and relief is limited to an injunction prohibiting or undoing the challenged conduct?
  7. Does the FTC's use of Section 5, independent of the Sherman Act, make it less likely that treble damages could be assessed in follow-on actions? If so, should that fact influence the interpretation of Section 5's scope, or its application?
  8. What limiting principles should be applied to the definition of ``unfair methods of competition?'' How can ``unfair methods of competition'' under Section 5 be defined to avoid capturing benign or procompetitive conduct while allowing for sufficient guidance and predictability for business?
  9. If Section 5 captures conduct falling outside the Sherman Act, what economic evidence and analysis would be useful in identifying violations? What economic evidence and analysis would be useful in identifying the proper limiting principles for the enforcement of Section 5?
  10. Was the Commission's use during the last two decades of Section 5 claims in settled complaints that did not allege all the elements of a Sherman Act violation beneficial and principled or harmful and unbounded? How might courts have evaluated these claims?
  11. What are examples of business conduct that may be unfair methods of competition addressable by Section 5? How does that conduct harm competition and consumers?"

See, Federal Register, August 28, 2008, Vol. 73, No. 168, at Pages 50818-50819.

People and Appointments

8/28. Catherine Bohigian, Chief of the Federal Communications Commission's (FCC) Office of Strategic Planning and Policy Analysis will work for Cablevision. She was also previously a legal advisor to FCC Chairman Kevin Martin. Both Martin and Bohigian previously worked for the law firm now named Wiley Rein. See, FCC release.

More News

8/28. The U.S. Court of Appeals (3rdCir) issued its opinion [17 pages in PDF] in In Re Lucent Death Benefits ERISA Litigation, a class action brought under the Employee Retirement Income Security Act (ERISA) by former employees of AT&T and Lucent regarding termination of a pensioner death benefit. The District Court dismissed the complaint. The Court of Appeals affirmed. This case is In Re Lucent Death Benefits ERISA Litigation, U.S. Court of Appeals for the 3rd Circuit, App. Ct. Nos. 06-5008 and 06-5009, appeals from the U.S. District Court for the District of New Jersey, D.C. Nos. 03-cv-05017, 04-cv-01099, and 04-cv-00640, Judge Dennis Cavanaugh presiding.

8/28. The U.S. Court of Appeals (4thCir) issued its opinion [17 pages in PDF] in Mullins v. AT&T, a disability and Employee Retirement Income Security Act (ERISA) case. The District Court granted summary judgment to AT&T and the other defendants on the disability claim, and granted summary judgment to Mullins on the ERISA claim. Both Mullins and the defendants appealed. The Court of Appeals issued an opinion designated "unpublished" that remands to the District Court with instructions. This case is Margaret Mullins v. AT&T, et al., U.S. Court of Appeals for the 4th Circuit, App. Ct. Nos. 04-2135, 04-2136 and 07-1717.

More News

8/26. The Federal Communications Commission (FCC) released a document [2 pages in PDF] titled "Public Notice" that announces that the FCC has proposed to the Office of Management and Budget (OMB) changes to its annual reporting forms that request certain employee data from multichannel video programming distributors (MVPDs) (FCC Form 395-A) (OMB Control No. 3060-0095) and from broadcasters (FCC Form 395-B) (OMB Control No. 3060-0390). This item is FCC 08-194 in MM Docket No. 98-204.

Go to News from August 21-25, 2008.