1/30. The U.S. Court of Appeals (9thCir) issued its opinion [26 pages in PDF] in Kramer v. Toyota, a case regarding the enforceability of arbitration clauses in consumer contracts. The Court of Appeals affirmed the judgment of the District Court, which denied Toyota's motion to compel arbitration.

This case involves car sales contracts. However, arbitration clauses are also commonly used, and challenged by class action lawyers, in consumer contracts involving telecommunications, broadband, and other tech services and products.

The nominal plaintiffs, Jessica Kramer and others, bought Toyota cars. The purchase contracts contained both arbitration and class action waiver clauses. The plaintiffs filed a complaint alleging defective brakes, and pleading several California state law causes of action.

State and federal courts courts in California have a history of hostility to arbitration clauses, and class action waiver clauses, in consumer contracts. However, the Supreme Court addressed this matter in AT&T Mobility v. Concepcion in 2011. See, April 27, 2011 opinion [39 pages in PDF], and story titled "Supreme Court Holds Class Action Waiver Clauses in Arbitration Contracts Are Enforceable" in TLJ Daily E-Mail Alert No. 2,228, April 28, 2011.

The Supreme Court held that a contract between a wireless phone company and its consumers that provides for mandatory arbitration of consumer complaints, and waiver of class actions, is enforceable under Section 2 of the Federal Arbitration Act (FAA), notwithstanding the state of California's attempt to render such contracts unenforceable as unconscionable.

The Supreme Court's opinion had the effect of abrogating the California Supreme Court's 2005 opinion in Discover Bank v. Superior Court, 113 P.3d 1100, which had held that class action arbitration provisions are unconscionable and unenforceable in consumer contracts of adhesion under certain circumstances.

Despite the US Supreme Court's recent ruling, the District Court and Court of Appeals, held the arbitration clauses in the present case unenforceable.

The Court of Appeals ruled that since the arbitration clauses were in contracts between car purchasers and car dealers, and since Toyota was not a signatory, there was no agreement between the plaintiffs and Toyota to arbitrate.

The Court of Appeals also rejected various legal arguments, in the nature of equitable estoppel, advanced by Toyota that the plaintiffs are nevertheless bound by the arbitration clauses in the present litigation.

This case is Jessica Kramer, et al.  v. Toyota Motor Corporation, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 12-55050, an appeal from the U.S. District Court for the Central District of California, D.C. No. 8:10-ml-02172-CJC-RNB, Judge Cormac Carney presiding. Judge Gordon Quist wrote the opinion of the Court of Appeals, in which Judges Andrew Kleinfeld and Margaret McKeown joined.

It might also be observed that the Supreme Court's 2011 decision was based upon a fragile 5-4 split.

In addition, there have been efforts in recent Congresses to pass an amendment to the FAA that would render unenforceable arbitration clauses in consumer contracts, as well as employment contracts. See, for example, HR 3010 [LOC | WW] and S 1782 [LOC | WW], both titled the "Arbitration Fairness Act of 2007", in the 110th Congress, and HR 1020 [LOC | WW] and S 931 [ LOC | WW], both titled the "Arbitration Fairness Act of 2009", in the 111th Congress. Most of the sponsors were Democrats.

Proponents could not move these bills during the 111th Congress when Democrats controlled the House, Senate, and Presidency. Hence, it is highly unlikely that any such bill would be enacted in the current 113th Congress.

1/25. The U.S. Court of Appeals (4thCir) issued its opinion [22 pages in PDF] in US v. Appelbaum, regarding public access to court orders issued pursuant to 18 U.S.C. § 2703(d) compelling service providers, such as Twitter, to provide the government with transactional information, or the contents of electronic communications.

The basic principle is that courts and judicial proceedings are open to the parties and the public. The 6th Amendment guarantees defendants a "public trial" in criminal cases. In both criminal and civil cases, trials, hearings and other events are open to the public. Pleadings, orders, opinions and other judicial records are available for inspection by the public.

There are exceptions, and this cases addresses one -- whether the public has a right of access to these Section 2701(d) orders and related pleadings.

The Court of Appeals held that there is no First Amendment right to access such documents, and in this case, the common law right to access such documents is outweighed by countervailing interests.

This case arises out of the government's criminal investigation of Bradley E. Manning's unauthorized transfer of documents to Julian P. Assange for publication in his WikiLeaks web site. As a part of its investigation, the government sought and obtained from the District Court an order directed to Twitter compelling it to provide certain records regarding three of its subscribers, Jacob Appelbaum, Rop Gonggrijp, and Birgitta Jonsdottir.

Jonsdottir (at right) is a member of the Iceland national legislature.

The Court of Appeals wrote that the order directed Twitter "to provide Subscribers' names, usernames, personal contact information, account information, connection records, financial data, length of service, direct messages to and from email addresses and Internet Protocol addresses for all communications between November 1, 2009, and December 14, 2010". (Footnote omitted.)

The ACLU's Arden Fine stated in a release that "This case shows just how easy it is for the government to obtain information about what people are doing on the internet, and it highlights the need for our electronic privacy laws to catch up with technology. The government should not be able to get private information like this without getting a warrant and also satisfying the standard required by the First Amendment, and it shouldn't be able to do so in secret except in unusual circumstances".

He added that "Unfortunately, today’s decision makes it easier for the government to keep its electronic surveillance activities hidden, even when there is no longer any need to keep them secret."

District Court Proceedings. The parties in the U.S. District Court (EDVa) are the US, Twitter, and the three Twitter subscribers, Appelbaum, Gonggrijp, and Jonsdottir.

Although, Twitter is not a party to this appeal. Also, the American Civil Liberties Union (ACLU) and Electronic Frontier Foundation (EFF) are not parties, but are litigating this case as counsel for Jonsdottir.

The District Court sealed the order, and issued a gag order barring Twitter from informing the three subscribers. However, the District Court soon after unsealed it, and authorized the government to disclose its existence to the subscribers.

These three subscribers then filed a motion with the District Court requesting that the Court vacate the order directing Twitter to provide records regarding the three subscribers. Their motion also requested that the District Court unseal all documents relating to that order, and unseal and publicly docket any other § 2703(d) orders on the subject of the investigation pertaining to subscribers that were issued to companies other than Twitter.

A Magistrate Judge (MJ) of the District Court denied the motion to vacate. The MJ also granted the motion to unseal pleadings filed during the litigation over the Twitter order, but exempted the most important pleading -- the Department of Justice's (DOJ) application for the Section 2703(d) order. The MJ also denied the motion to unseal the other section 2703(d) orders.

The MJ opined that there is no First Amendment right to access the DOJ's Twitter application, and the other section 2703(d) orders and applications. The MJ also opined that the common law presumption of access to judicial records was overcome because the sealed documents contained "sensitive nonpublic facts, including the identity of targets and witnesses in an ongoing criminal investigation."

Statute. Section 2703 is part of the Stored Communications Act (SCA), which in turn, is part of the Electronic Communications Privacy Act (ECPA).

The SCA refers to both a "remote computing service" (RCS) and an "electronic communications service" (ECS). Both terms are defined by definitions drafted in 1986. Both definitions, like much of the ECPA, are out of date and obsolete. RCS is defined at 18 U.S.C. § 2711. ECS is defined at 18 U.S.C. § 2510.

18 U.S.C. § 2702 provides that a RCS or ECS may not disclose contents of, or transactional records regarding, stored communications.

Section 2703 then provides that the government may obtain orders directing a RCS or ECS to disclose contents or transactional records.

Subsection 2703(b) provides that "A governmental entity may require a provider of remote computing service to disclose the contents of any wire or electronic communication ... without required notice to the subscriber or customer, if the governmental entity obtains a warrant ... or with prior notice from the governmental entity to the subscriber or customer if the governmental entity ... uses an administrative subpoena ... or ... obtains a court order for such disclosure under subsection (d) ..."

Subsection 2703(c) provides that "A governmental entity may require a provider of electronic communication service or remote computing service to disclose a record or other information pertaining to a subscriber to or customer of such service (not including the contents of communications) only when the governmental entity ..." if the government meets any of several requirements, one of which is obtaining an order under Section 2703(d).

Subsection 2703(d) provides that "A court order for disclosure under subsection (b) or (c) may be issued by any court that is a court of competent jurisdiction and shall issue only if the governmental entity offers specific and articulable facts showing that there are reasonable grounds to believe that the contents of a wire or electronic communication, or the records or other information sought, are relevant and material to an ongoing criminal investigation." This includes a very low standard, rendering it easy for the government to obtain such orders.

Then, 18 U.S.C. § 2705 provides for the issuance of gag orders, orders "delaying the notification" to subscribers.

Court of Appeals Holding. The Court of Appeals first held that there is no First Amendment right of access to § 2703(d) proceedings.

The Court of Appeals applied the two prong test articulated by the Supreme Court in its 1988 opinion in Press-Enterprise v. Superior Court, 478 U.S. 1.

First Amendment right of access to orders and proceedings is dependent upon whether the place and process have historically been open to the press and general public, and whether public access plays a significant positive role in the functioning of the particular process in question. The Court of Appeals concluded that neither prong is satisfied in the present case.

The Court of Appeals next wrote that there is a common law right of access to judicial records, and that Section 2703(d) orders are judicial records. However, it added that this right of access is a presumption that may be overcome.

The Court continued that "To substantively overcome the common law presumption of access to § 2703(d) orders, a court must find that there is a ``significant countervailing interest´´ in support of sealing that outweighs the public’s interest in openness."

The Court of Appeals wrote that in balancing, a court may consider (1) whether the records are sought for improper purposes, such as promoting public scandals or unfairly gaining a business advantage, (2) whether release would enhance the public's understanding of an important historical event, and (3) whether the public has already had access to the information contained in the records.

The Court of Appeals noted that the subscribers argued that there are public interests in "the ongoing debate about WikiLeaks' publications", the "nature and scope of the government's electronic surveillance of internet activities", and "the extent the § 2703 orders have not been complied with".

The Court of Appeals continued that the MJ considered these interests, and found, like the Court of Appeals, that they are outweighed by the government's interests in "maintaining the secrecy of its investigation, preventing potential subjects from being tipped off, or altering behavior to thwart the Government's ongoing investigation, outweighed those interests."

Finally, the Court of Appeals wrote that the three subscribers "are not forever barred from access ... because at some point in the future, the Government’s interest in sealing may no longer outweigh the common law presumption of access. At such point, the Subscribers may seek to unseal these documents."

In addition, Judge Wilson wrote in a concurring opinion that "The motions that support these § 2703(d) orders, the orders themselves, and the very existence of these orders implicate or directly convey highly private information and confirm the existence of a criminal investigation. Yet an essential purpose of the Electronic Communications Privacy Act is the protection of the privacy interests of subscribers or customers in their electronically stored information and records. To presume a common law right of access to these records because the government has obtained an order from a federal court -- which acts in these cases as a limited backstop against government overreaching -- strikes at the Act’s essential purpose. The government’s monitored intrusion of the citizen’s private interests would thereby justify privacy intrusions by others. Rather than serving as a check against invasions of privacy, the Act would serve to magnify them. Consequently, I believe that a common law right of access is squarely at odds with the Act’s essential purpose."

Leahy Bill. Sen. Patrick Leahy (D-VT) proposed legislation late in the 112th Congress that would make significant revisions to the SCA portion of the ECPA, and especially to Section 2703.

Its key section would provide that "A governmental entity may require the disclosure by a provider of electronic communication service or remote computing service of the contents of a wire or electronic communication that is in electronic storage with or otherwise stored, held, or maintained by the provider only if the governmental entity obtains a warrant issued using the procedures described in the Federal Rules of Criminal Procedure (or, in the case of a State court, issued using State warrant procedures) that is issued by a court of competent jurisdiction directing the disclosure."

Sen. Leahy offered this as part of an amendment to HR 2471 [LOC | WW], a bill regarding video privacy. The Senate Judiciary Committee (SJC), which Sen. Leahy chairs, approved HR 2471 with Sen. Leahy's proposal. However, the bill was enacted into law without Sen. Leahy's amendments.

See, story titled "Senate Judiciary Committee Approves Leahy Bill to Require Warrant for Accessing Cloud Stored E-Mail" in TLJ Daily E-Mail Alert No. 2,479, November 30, 2012, and TLJ red line mark up of this bill.

This case is U.S.A. v. Jacob Appelbaum, Rop Gonggrijp, Birgitta Jonsdottir, and Twitter, Inc., U.S. Court of Appeals for the 4th Circuit, App. Ct. No. 11-5151, an appeal from the U.S. District Court for the Eastern District of Virginia, at Alexandria, D.C. No. 1:11-dm-00003-TCB-LO-1, Judge Liam O'Grady presiding. Judge Roger Gregory wrote the opinion of the Court of Appeals, in which Judge Allyson Duncan joined. Judge Samuel Wilson (USDC/WDVa, sitting by designation) wrote a concurring opinion.

All four of the Article III Judges involved in this case are Republican appointees. Judges Gregory, Duncan and O'Grady were appointed by the second President Bush. Judge Wilson was appointed by the first President Bush.

The House will meet in pro forma session at 11:00 AM.

The Senate will not meet.

9:30 AM - 3:30 PM. The Securities and Exchange Commission's (SEC) Advisory Committee on Small and Emerging Companies will meet. Free. Open to the public. Webcast by SEC. See, notice and agenda. Location: SEC, Multi-Purpose Room LL-006, 100 F St., NE.

The House will meet at 2:00 PM for legislative business. The House will consider several non-technology related items under suspension of the rules. Votes will be postponed until 6:30 PM. See, Rep. Cantor's schedule.

The Senate will meet at 2:00 PM.

12:00 NOON - 1:30 PM. The Information Technology and Innovation Foundation (ITIF) will host a panel discussion titled "Perspectives on Global Enterprises, Corporate Location Decisions, and U.S. Policy Challenges". The speakers will be Jennifer Daniels (NCR Corporation), Don Rosenberg (Qualcomm General Counsel) and Robert Atkinson (ITIF). See, notice. Location: Reserve Officers Association, 5th Floor, One Constitution Ave., NE.

EXTENDED TO MARCH 4. 5:00 PM. Deadline to submit reply comments to the Copyright Office (CO) in response to its notice of inquiry (NOI) titled "Orphan Works and Mass Digitization". See, notice in the Federal Register, Vol. 77, No. 204, October 22, 2012, at Pages 64555-64561. See also, story titled "Copyright Office Issues Notice of Inquiry on Orphan Works" in TLJ Daily E-Mail Alert No. 2,468, November 2, 2012. See, extension notice in the Federal Register, Vol. 77, No. 231, November 30, 2012 at Page 71452.

EXTENDED FROM JANUARY 4. 5:00 PM. Extended deadline to submit initial comments to the Copyright Office (CO) in response to its notice of inquiry (NOI) titled "Orphan Works and Mass Digitization". See, notice in the Federal Register, Vol. 77, No. 204, October 22, 2012, at Pages 64555-64561. See also, story titled "Copyright Office Issues Notice of Inquiry on Orphan Works" in TLJ Daily E-Mail Alert No. 2,468, November 2, 2012. See, extension notice in the Federal Register, Vol. 77, No. 231, November 30, 2012 at Page 71452.

The House will meet at 10:00 AM for morning hour, and at 12:00 NOON for legislative business. See, Rep. Cantor's schedule.

10:00 AM. The House Judiciary Committee (HJC) will hold a hearing titled "America's Immigration System: Opportunities for Legal Immigration and Enforcement of Laws against Illegal Immigration". The witnesses will be __. See, notice. Location: Room 2141, Rayburn Building.

10:30 AM. The House Commerce Committee's (HCC) Subcommittee on Communications and Technology and the House Foreign Affairs Committee's (HFAC) Subcommittee on Terrorism, Nonproliferation, and Trade and Subcommittee on Africa, Global Health, Global Human Rights, and International Organizations will hold a joint hearing titled "Fighting for Internet Freedom: Dubai and Beyond". The witnesses will be FCC Commissioner Robert McDowell, David Gross (Wiley Rein), Sally Wentworth (Internet Society), and Harold Feld (Public Knowledge). See, HCC notice and notice and HFAC notice. Location: Room 2123, Rayburn Building.

10:30 AM. The Copyright Office (CO) will host a presentation by Peter Jaszi (American University law school) titled "Best Practices in Fair Use". See, notice. Location: Coolidge Auditorium, Jefferson Building, 101 Independence Ave., SE.

12:00 NOON. The Heritage Foundation (HF) will host a discussion of the book [Amazon] titled "A Nation Forsaken - EMP: The Escalating Threat of an American Catastrophe". The speaker will be Michael Maloof, the author. Webcast by HF. Free. Open to the public. See, notice. Location: HF, 214 Massachusetts Ave., NE.

12:00 NOON - 1:30 PM. The American Bar Association (ABA) will host a webcast and teleconferenced panel discussion titled "Single Claim Restriction Requirements: The Interplay Between 35 USC Section 112 and 35 USC Section 121". The speakers will be Thomas Irving (Finnegan Henderson), Orlando Lopez (Burns & Levinson), Daniel Sullivan (USPTO), Robert Titus (Eli Lilly), and Keisha Rodic (Drinker Biddle & Reath). Prices vary. CLE credits. See, notice.

12:30 PM. The House Oversight and Government Reform Committee (HOGRC) will hold a business meeting. See, notice. Location: Room __, Rayburn Building.

12:45 - 2:00 PM. The American Enterprise Institute (AEI) will host a lunch. The speaker will be Rep. Eric Cantor (R-VA), the House Majority Leader. Free. Open to the public. Webcast by AEI. See, notice and registration page. Location: AEI, 12th floor, 1150 17th St., NW.

The House will meet at 9:00 AM for legislative business. See, Rep. Cantor's schedule.

9:30 AM. The House Science Committee (HSC) will hold a hearing titled "American Competitiveness: The Role of Research and Development". The witnesses will be Richard Templeton (P/CEO of Texas Instruments), Shirley Ann Jackson (President of Rensselaer Polytechnic Institute), and Charles Vest (President of the National Academy of Engineering). The HSC will webcast this hearing. See, notice. Location: Room 2318, Rayburn Building.

11:00 AM - 5:00 PM. Day one of a two day meeting of the National Institute of Standards and Technology's (NIST) Visiting Committee on Advanced Technology (VCAT). See, notice in the Federal Register, Vol. 78, No. 2, January 3, 2013, at Page 292. Location: NIST, Portrait Room, Administration Building, 100 Bureau Drive, Gaithersburg, MD.

12:30 - 1:45 PM. The American Bar Association (ABA) will host a webcast panel discussion titled "O'Brien v. Leegin: Perspectives on State-Law Resale Price Maintenance Actions". The speakers will be Schonette Walker (Maryland Office of the Attorney General), James Armstrong (Foulston Siefkin), John Asker (NYU business school), Benjamin Labow (California Department of Justice), and Will Wohlford (Morris Laing). Free. No CLE credits. See, notice. See also, story titled "SCUS Holds That All Vertical Price Restraints Are Subject to Rule of Reason" in TLJ Daily E-Mail Alert No. 1,603, June 28, 2007.

6:30 PM. The Washington Press Club Foundation will host an event titled "69th Annual Congressional Dinner". The reception begins at 6:30 PM. The dinner and program begin at 8:00 PM. Location: Grand Ballroom, Mandarin Oriental, 1330 Maryland Ave., SW.

Rep. Cantor's schedule states that no votes are expected in the House.

8:30 - 11:15 AM. Day two of a two day meeting of the National Institute of Standards and Technology's (NIST) Visiting Committee on Advanced Technology (VCAT). See, notice in the Federal Register, Vol. 78, No. 2, January 3, 2013, at Page 292. Location: NIST, Portrait Room, Administration Building, 100 Bureau Drive, Gaithersburg, MD.

8:45 AM - 5:00 PM. The Federal Communications Commission's (FCC) Federal-State Joint Conference on Advanced Services will host an event titled "Broadband Summit". See, notice. Webcast. Free. Open to the public. Location: FCC, Commission Meeting Room, TW-C305, 445 12th St., SW.

9:00 AM - 4:15 PM. The U.S. China Economic and Security Review Commission will hold an event titled "China’s New Leadership and Implications for the United States". Free. Open to the public. See, notice. Location: Room 2118, Rayburn Building.

10:00 AM. The Senate Judiciary Committee (SJC) will hold an executive business meeting. The agenda again includes consideration of three appeals court nominees: Richard Taranto (USCA/FedCir), Robert Bacharach (USCA/10thCir), and William Kayatta (USCA/1stCir). See, notice. See also, story titled "Richard Taranto and the Federal Circuit" in TLJ Daily E-Mail Alert No. 2,497. Webcast. Location: Room 226, Dirksen Building.

6:00 - 8:00 PM. The Federal Communications Bar Association (FCBA) will host an event titled "Seminar on Enforcement Bureau Nuts and Bolts". The deadline for reservations and cancellations is 12:00 NOON on February 6. Prices vary. CLE credits. See, notice. Location: Drinker Biddle & Reath, 1501 K St., NW.

Rep. Cantor's schedule states that no votes are expected in the House.

9:00 AM - 2:00 PM. The Heritage Foundation (HF) and Taiwan Benevolent Association of America (TBAA) will host an event titled "Shoring Up the US Taiwan Partnership". The speakers will be Sen. John Cornyn (R-TX), Walter Lohman (HF), Taidi Fang (TBAA President), Joanna Lei (former member of the Legislative Yuan), Rupert Chambers (U.S.-Taiwan Business Council President), Claude Barfield (American Enterprise Institute), Matthew Goodman (Center for Strategic and International Studies), Derek Scissors (HF), Randy Schriver (Project 2049), Dean Cheng (HF), Stephen Yates (DC International Advisory), and Vincent Wang (University of Richmond). Webcast by HF. Free. Open to the public. Lunch will be served. See, notice. Location: HF, 214 Massachusetts Ave., NE.

Deadline for all parties, except foreign governments to submit comments, and requests to testify at the February 20, 2013 hearing, of the Office of the U.S. Trade Representative (OUSTR) to assist it in making its Special 301 identifications of countries that deny adequate and effective protection of intellectual property rights (IPR) or deny fair and equitable market access to U.S. persons who rely on intellectual property protection. See, story titled "OUSTR Seeks Special 301 Comments on Countries that Deny Adequate IPR Protection" in TLJ Daily E-Mail Alert No. 2,500, December 31, 2012. See also, notice in the Federal Register, December 31, 2012, Vol. 77, No. 250, at Pages 77178-77180.

1/24. The U.S. Court of Appeals (9thCir) issued its opinion [9 pages in PDF] in Mattel v. MGA Entertainment, yet another opinion in the long running epic legal saga involving proprietary rights in Bratz dolls [Amazon sales page].

The present opinion deals with MGA's state law misappropriation of trade secrets claim (for which the trial jury awarded MGA $80 Million in damages, and another $80 Million in exemplary damages), and the award of attorneys fees to MGA on Mattel's failed copyright infringement claim.

The Court of Appeals vacated the trade secrets verdict, and ordered the District Court to dismiss the claim with prejudice. It upheld the attorneys fees award. The Court of Appeals added this: "While this may not be the last word on the subject, perhaps Mattel and MGA can take a lesson from their target demographic: Play nice."

This case is Mattel, Inc., et al. v. MGA Entertainment, Inc., et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 11-56357, an appeal from the U.S. District Court for the Central District of California, D.C. No. 2:04-cv-09049-DOC-RNB, Judge David Carter presiding. Chief Judge Alex Kozinski wrote the opinion of the Court of Appeals, in which Judges Stephen Trott and Kim Wardlaw joined.

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