FCC Releases Text Of NOI on Whipsawing

8/15. The Federal Communications Commission (FCC) released the text [PDF] of its Notice of Inquiry (NOI) regarding whipsawing conduct by foreign carriers, including "instances in which foreign carriers used circuit disruptions or threats of circuit disruptions to force U.S. carriers into settlement rate increases".

The NOI states that the current problem concerns the nations of Ecuador, Jamaica and Nicaragua. It states that "Recently, certain foreign carriers of Ecuador, Jamaica and Nicaragua have blocked international phone circuits, in some instances with the alleged support and endorsement of their respective governments and regulators, as a negotiating tactic to obtain higher interconnection rates from U.S. carriers. According to AT&T, U.S.-to-Ecuador mobile terminating traffic has been disrupted since March 2005 because U.S. carriers would not agree to mobile termination rate increases. Nicaraguan carriers began blocking circuits in early December 2004 and maintained the blockage for over three months until the U.S. carriers agreed to pay higher rates. Jamaican carriers began blocking circuits in June 2005 and maintained such blockage until U.S. carriers acceded to the demands of Jamaican carriers." (Footnote omitted.)

The NOI seeks comments on "ways to improve our existing procedures in order to better respond to threats of circuit disruptions and to petitions and complaints submitted by U.S. carriers that allege anticompetitive or ``whipsawing´´ behavior on the part of foreign carriers."

Michael Gallagher, head of the National Telecommunications and Information Administration (NTIA), stated in a release [PDF] that "I commend the FCC for its investigation of foreign carriers who cut circuits to the U.S. Blocking circuits to extract higher rates from U.S. consumers is not acceptable. Circuit blocking is contrary to the best practices of growing digital economies and the expansion of e-commerce."

The FCC adopted this NOI on August 5, 2005. It released it on August 15, 2005. It is FCC 05-152 in IB Docket No. 05-254. Initial comments will be due within 30 days of publication of a notice in the Federal Register. This publication has not yet taken place. Reply comments will be due within 50 days of publication.

FTC Takes Action Against Deceptive Online Marketing of Credit Monitoring Service

8/15. The Federal Trade Commission (FTC) filed a complaint [PDF] in U.S. District Court (CDCal) against Experian Consumer Direct in connection with its unfair and deceptive marketing of a credit monitoring service by offering a free credit report, and then charging consumers' credit cards for the credit monitoring service. The FTC simultaneously settled with the defendant.

The complaint alleges violation of Section 5 of the FTC Act, which is codified at 15 U.S.C. § 45(a), and violation of Section 211 of the Fair and Accurate Credit Transactions Act of 2003 (FACT Act), which is Public Law 108-159. Section 211 amended 15 U.S.C. § 168(j).

The defendant is Consumerinfo.com, Inc., which does business under the names Experian Consumer Direct, QSpace, Inc., and Iplace, Inc. It is represented in this case by the law firms of Jones Day and Hudson Cook.

The settlement agreement states that Experian does not admit liability. Also, Experian stated in a release that it "denies that its sites were ever misleading to consumers".

The complaint alleges that Experian's "advertisements and promotional materials offer consumers the opportunity to obtain a credit report free of charge through Consumerinfo's websites located at www.consumerinfo.com, www.freecreditreport.com, and other Internet addresses. Consumers who order their free report are automatically enrolled in a credit monitoring service (``Credit Check Monitoring Service´´), a service that allows consumers to access their credit report and determine if inquiries, negative information, public record information, new accounts, or address changes have been added to the consumers' credit files. Consumers who order the free credit report receive a 30-day ``free´´ trial membership in the Credit Check Monitoring Service. If the consumer does not cancel his membership within the trial period, he is charged an annual fee of $79.95 (prior to December 2003) or a monthly fee of $12 (since January 2004). The fee is automatically charged to the consumer's credit or debit card, which the consumer is required to provide to obtain his free credit report, and renews each period without further notice to the consumer or the need for further action on the consumer's part." (Parentheses in original.)

The FTC's complaint further alleges that "Through at least December 2003, none of Consumerinfo's advertisements for the Credit Check Monitoring Service disclosed the $79.95 annual membership fee. Instead, Consumerinfo's advertisements stated that "there's no obligation and no commitment."

It further alleges that "All of Consurnerinfo's Internet advertisements and webpages ultimately link to Consurnerinfo's online order form. The online order form is the only means through which consumers can request the "free" credit reports from Consumerinfo."

The complaint also alleges that Experian collected credit card information, and that "The charge was made to the credit card account numbers that Consumerinfo had assured consumers were needed only to ``establish [their] account.´´" (Brackets in original.)

The complaint concludes that "Many consumers were thus unaware when signing up for their free credit report that they were also automatically signing up for Consumerinfo's Credit Check Monitoring Service, and would incur a $79.95 charge unless they cancelled within 30 days."

The FTC and Experian also jointly filed a Stipulated Final Judgment and Order for Permanent Injunction [PDF]. In this settlement, Experian admits nothing. It requires Experian to change the way it markets its monitoring service. Experian stated in its release that "Many of today's announced changes were completed in September 2003 based on initial discussions and approval by FTC staff."

The settlement agreement does, however, require Experian to make refund payments to certain consumers, and requires Experian to "pay nine hundred and fifty thousand dollars ($950,000) to the Commission".

This case is FTC v. Consumerinfo.com, Inc., doing business as Experian Consumer Direct, QSpace, Inc., and Iplace, Inc., U.S. District Court for the Central District of California, D.C. No. SACV05-801 AHS(MLGx).

FCC Issues NALS in Tax Collection Actions

8/15. The Federal Communications Commission (FCC) fined Telecom Management, Inc. (TMI) $280,000. The FCC alleges that TMI failed to pay taxes owed to the FCC. Specifically, the FCC adopted and released a document [9 pages in PDF] titled "Notice of Apparent Liability for Forfeiture" (NAL) that alleges failure to pay Universal Service Fund (USF) taxes, and concludes that TMI is "apparently liable for a total forfeiture of $280,000". See also, FCC release [PDF].

TMI states in its web site that its is a management consulting firm, and that is does not sell or broker telecommunications services. In contrast, the FCC states in the NAL that TMI is a "communications carrier", and that it resells "interstate, interexchange services purchased from Global Crossing Bandwidth, Inc."

47 U.S.C. § 254(d) authorizes the FCC to tax "Every telecommunications carrier that provides interstate telecommunications services" in order to fund its USF subsidy programs.

The NAL also asserts that TMI failed to pay regulatory fees required of interstate telephone service providers.

The NAL asserts that "TMI had an unpaid USF obligation of approximately $420,000". The NAL fines TMI $270,000 in connection with non-payment of USF taxes, and $10,000 in connection with non-payment of regulatory fees.

This NAL is numbered FCC 05-156.

The FCC also fined OCMC, Inc. See, document [8 pages in PDF] titled "Notice of Apparent Liability for Forfeiture" (NAL). This NAL states that OCMC is "an operator service provider, interexchange carrier and toll reseller", and that "for years OCMC has made irregular and unsatisfactory payments to the USF".

The NAL states that OCMC's tax debt is $2,047,521, but that its fine is $1,133,761. This NAL is numbered FCC 05-157.

More Court Opinions and Orders

8/15. The U.S. Court of Appeals (9thCir) issued an order [PDF] in MGM v. Grokster. The order states that "In conformance with the mandate of the Supreme Court, we remand this case to the district court for further proceedings consistent with the opinion of the United States Supreme Court. See Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 125 S. Ct. 2764 (2005)." On June 27, 2005, the Supreme Court issued its unanimous opinion [55 pages in PDF] in MGM v. Grokster, reversing the judgment of the U.S. Court of Appeals (9thCir) regarding vicarious copyright infringement by the distributors of peer to peer (P2P) systems. The Supreme Court held that "one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties." See, story titled "Supreme Court Rules in MGM v. Grokster" in TLJ Daily E-Mail Alert No. 1,163, June 28, 2005.

8/15. The U.S. Court of Appeals (9thCir) issued its opinion [17 PDF] in Kourtis v. Cameron, a copyright case involving movie concepts. This suit arises out of disputes involving two movies, The Minotaur, conceived in 1987, but not yet produced, and Terminator II: Judgment Day, released in 1991. There have been many suits in the U.S. and Australia. The main issue on appeal in the present suit is whether the creators of the The Minotaur are collaterally estopped by a prior judgment from pursuing a copyright infringement claim against the producers of Terminator II. The District Court held that they are collaterally estopped. The Court of Appeals reversed. This case is Filia Kourtis and Con Kourtis v. James Cameron, et al., U.S. Court of Appeals for the 9th Circuit, App. Ct. No. 03-56703, an appeal from the U.S. District Court for the Central District of California, D.C. No. CV-02-02906-WMB, Judge William Byrne presiding. Judge Diarmuid O'Scannlain, wrote the opinion of the Court of Appeals, in which Judges Kim Wardlaw and Charles Lovell joined.

8/15. Harold Degenhardt, District Administrator of the Securities and Exchange Commission's (SEC) Fort Worth District Office, will leave the SEC in September to become a partner in the Dallas office of the law firm of Fulbright & Jaworski. See, SEC release.

More News

8/15. The Federal Communications Commission (FCC) released the text [38 pages in PDF] of its Order on Reconsideration (OR) regarding the FCC's band plan, and licensing and service rules, for Advanced Wireless Service (AWS) spectrum in the 1710-1755 MHz and 2110-2155 MHz bands. This OR pertains to spectrum reallocated for use by third generation (3G) wireless services, which are intended to bring broadband internet access to portable and fixed devices. The FCC adopted this OR on August 5, 2005. See, story titled "FCC Adopts Order Amending Service Rules for AWS" in TLJ Daily E-Mail Alert No. 1,190, August 8, 2005. This OR is FCC 05-149 in WT Docket No. 02-353.

8/15. The National Science Foundation (NSF), a federal agency, announced in a release that its "expects to make 36 new awards totaling $36 million through its 2005 Cyber Trust program. The awards, ranging from $200,000 to $7.5 million, include two new centers -- one focused on the design and technology for trustworthy voting systems and the other on securing electric power grids. Cyber Trust, the centerpiece of NSF's cybersecurity efforts, is based on a vision of society in which the computers and networks underlying national infrastructures, as well as in homes and offices, can be relied upon to work--even in the face of cyber attacks."

8/15. The National Science Foundation (NSF) published a notice in the Federal Register announcing the formation of an Advisory Committee for Cyberinfrastructure. See, Federal Register: August 15, 2005, Vol. 70, No. 156, at Page 47858.

8/15. The Office of Personnel Management (OPM) published a notice in the Federal Register that recites, describes, and sets the effective date (September 14, 2005) for its final regulations implementing parts of the E-Government Act of 2002. The notice states that this Act "authorizes the temporary detail of employees in the field of information technology (IT) management from the Federal Government to private sector organizations. It also authorizes Federal agencies to accept private sector employees detailed under this program. This program is envisioned to promote the interchange of Federal and private sector workers to enhance skills and competencies." See, Federal Register, August 15, 2005, Vol. 70, No. 156, at Pages 47711 - 47716.

8/15. The Internet Corporation for Assigned Names and Numbers (ICANN) released its comments [PDF] on the July 18, 2005 report [24 pages in PDF] of the Working Group on Internet Governance (WGIG). This report, titled "Report of the Working Group on Internet Governance", states the UN's ambitious case for acquiring power to regulate various aspects of the operation and use of the internet. See also, story titled "UN Seeks Vast Authority to Regulate Operation and Use of the Internet" in TLJ Daily E-Mail Alert No. 1,178, July 20, 2005.

FCC Seeks Comments on Petitions for Reconsideration of E911 VOIP Order

8/12. Several entities have filed petitions for reconsideration and/or clarification of the Federal Communications Commission's (FCC) May 19, 2005 order requiring "interconnected VOIP service providers" to comply with 911/E911 regulations. On August 12, the FCC released a public notice [PDF]. It does not set comment deadlines.

The FCC adopted its First Report and Order and Notice of Proposed Rulemaking on May 19, 2005. See, stories titled "FCC Adopts Order Expanding E911 Regulation to Include Some VOIP Service Providers", "Summary of the FCC's 911 VOIP Order", "Opponents of FCC 911 VOIP Order State that the FCC Exceeded Its Statutory Authority", and "More Reaction to the FCC's 911 VOIP Order", in TLJ Daily E-Mail Alert No. 1,139, May 20, 2005. The FCC released the text [90 pages in PDF] on June 3, 2005. See, story titled "FCC Releases VOIP E911 Order" in TLJ Daily E-Mail Alert No. 1,148, June 6, 2005.

The May 19 order and NPRM is numbered FCC 05-116. There are two proceedings. One is titled "In the Matter of IP-Enabled Services" and numbered WC Docket No. 04-36. The other is titled "E911 Requirements for IP-Enabled Service Providers" and numbered WC Docket No. 05-196

The FCC also issued a document [PDF] on July 26, 2005 that amends the May 19 order. See, story titled "FCC Amends E911 VOIP Order's Subscriber Notice, Reporting and Cancellation Requirements" in TLJ Daily E-Mail Alert No. 1,184, July 28, 2005.

National Emergency Number Association (NENA) and the VON Coalition filed a document [11 pages in PDF] titled "Joint Petition for Clarification National Emergency Number Association & Voice on the Net (VON) Coalition", on July 29, 2005. It addresses PSAP inability to receive automatic location information data, address validation, ability to access selective router via the PSTN, automatically obtained location information as registered location, limiting the location from which service can be used by contract, and testing and trials of service.

CompTel filed a document [8 pages in PDF] titled "Petition for Reconsideration/Clarification and/or Waiver", on July 29, 2005. It requests that the FCC "clarify that the customer notification and warning requirements set forth in § 9.5(e) of the Commission Rules do not apply to interconnected VoIP service providers providing non-nomadic VoIP services to business customers receiving T1 equivalent services based on the fact that E911 services received via traditional T1 broadband connection are functionally equivalent to the same services provided via VoIP, with no discernible difference in risk of E911 failure."

T-Mobile filed a document [16 pages in PDF] titled "Petition T-Mobile USA, Inc., for Clarification", on July 29, 2005. It makes numerous requests of the FCC. It characterizes these as "only limited clarification of certain operational aspects of the VoIP E911 Order".

The FCC's public notice, numbered DA 05-2277, does not set deadlines for public comments on these petitions. It does provide that oppositions will be due within 15 days after publication of a notice in the Federal Register. This publication has not yet occurred. Replies will be due within an additional 10 days.

FCC Releases NOI on Video Competition and Other Topics

8/12. The Federal Communications Commission (FCC) released its Notice of Inquiry (NOI) [34 pages in PDF] in which it seeks comments to assist it in preparing its annual report to the Congress on the state of competition in the market for the delivery of video programming. This NOI also seeks comments on many unrelated issues, such as network neutrality, VOIP, E911, IPv6, and DRM.

The NOI asks 34 pages of questions regarding video programming via cable, satellite, local exchange carriers, electric companies, internet service providers, and others. It also asks questions about internet video, video sales and rentals.

This report is required by 47 U.S.C. § 548(g). It requires that the FCC "annually report to Congress on the status of competition in the market for the delivery of video programming".

However, the NOI is broad, and seeks information on issues beyond competition in the market for the delivery of video programming. Commissioner Michael Copps points out in his separate statement [PDF] that "This NOI launches a report that serves as the factual foundation for numerous Commission decisions".

The NOI also covers voice over internet protocol (VoIP). It asks "What is the status of the development and deployment of VoIP?"

The NOI also enquires about network neutrality. It asks, at Paragraph 36, "Are cable operators who offer cable modem service giving subscribers a choice of Internet service providers?" It also asks "Has any cable operator blocked access to certain kinds of Internet content or applications and, if so, what kind?"

These questions relate to the yet to be released document titled "Policy Statement", which the FCC adopted on August 5, 2005. The FCC release that describes this item states that the policy statement provides that "consumers are entitled to access the lawful Internet content of their choice". See, story titled "FCC Adopts a Policy Statement Regarding Network Neutrality" in TLJ Daily E-Mail Alert No. 1,190, August 8, 2005.

The NOI also asks about IPv6. It states, at Paragraph 36, "We also seek information on whether cable operators are beginning to test or deploy Internet Protocol version 6 (IPv6)." See also, story titled "House Government Reform Committee Holds Hearing on IPv6" in TLJ Daily E-Mail Alert No. 1,168, July 6, 2005.

The NOI also asks about E911, even though the FCC already has other open proceedings related to E911. See, Paragraph 37.

The NOI also asks about digital rights management (DRM), at Paragraph 63.

Also, on the subject of internet protocol TV (IPTV), the NOI not only asks for comments on competition issues, but also on any "regulatory issues raised by the provision of IPTV over broadband Internet connections".

This proceeding is titled "In the Matter of Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming ". This NOI is 05-155 in MB Docket No. 05-255.

US Argues Congress Has Commerce Clause Authority to Criminalize Acts Involving Use of Computer

8/12. The Office of the Solicitor General (OSG) filed a petition for writ of certiorari with the Supreme Court in US v. Mathews. This case concerns whether the Congress can enact an criminal statute, based upon Commerce Clause authority, where the crime involves use of materials, "including a computer", that have traveled in interstate commerce.

18 U.S.C. § 2252A(a) provides, in part, that "(a) Any person who ... (5) ... (B) knowingly possesses any book, magazine, periodical, film, videotape, computer disk, or any other material that contains an image of child pormography that has been mailed, or shipped or transported in interstate or foreign commerce by any means, including by computer, or that was produced using materials that have been mailed, or shipped or transported in interstate or foreign commerce by any means, including by computer, ... shall be punished ..."

The original understanding of the Constitution was that the Congress has authority to enact legislation only on those topics enumerated in Article I. There is no general grant of criminal law making authority in the Constitution. There is an implied power to enact certain criminal laws as "necessary and proper for carrying into Execution" other enumerated powers. See, Article I, Section 8, Clause 18. Many federal criminal statutes, including the one at issue in this case, as well as many technology related criminal statutes, are based upon the authority of the Commerce Clause, Article I, Section 8, Clause 2.

The U.S. District Court (NDAlab) and the U.S. Court of Appeals (11thCir) both held that applying this statute to this defendant exceeds the Congress' authority under the Commerce Clause. The OSG asks the Supreme Court to grant certiorari, and vacate the judgment of the Court of Appeals. It concludes that this "case should be remanded for further consideration in light of this Court's decision in Gonzales v. Raich".

On June 6, 2005, the Supreme Court issued its opinion [79 pages in PDF] in Gonzales v. Raich, another case regarding the authority of the Congress to enact criminal statutes under the Commerce Clause. The Court upheld a section of the Controlled Substances Act as a valid exercise of federal power. See, story titled "Supreme Court Upholds Broad Congressional Power to Enact Criminal Statutes Under Commerce Clause" in TLJ Daily E-Mail Alert No. 1,149, June 7, 2005.

This case is US v. Justin Wayne Matthews, Sup. Ct. No. 05-59, a petition for writ of certiorari to the U.S. Court of Appeals for the 11th Circuit. The Court of Appeals number is 04-11052. The U.S. District Court for the Northern District of Alabama number is 02-00549 CR-S-M.

1st Circuit Issues En Banc Opinion in Councilman Case

8/11. The U.S. Court of Appeals (1stCir) issued its divided en banc opinion in US v. Councilman, a landmark case involving the Wiretap Act, the Stored Communications Act, and unauthorized accessing of e-mail communications.

The government prosecuted Bradford Councilman under the Wiretap Act for accessing the e-mail of other people. The District Court, and the majority of a divided three judge panel of the Court of Appeals, held that the Wiretap Act does not apply to stored e-mail, as opposed to e-mail in transit. And now, a divided en banc panel reached the opposite conclusion: the Wiretap Act does apply to e-mail in transient storage.

The significance of this case lies not in whether Councilman spends some time in detention and performing community service. Rather, it goes to the law that protects the privacy of e-mail communications, not only from invasions by service providers, but also from law enforcement authorities (LEAs).

See, full story.

So, Just What Are All These Statutory Sections Cited in the Councilman Case?

8/11. The following is a cursory and incomplete listing of the statutory sections that are pertinent to U.S. v. Councilman, and the issues raised by this case. The subject is complicated by the circumstance that Bradford Councilman committed the acts at issue in 1998, and was indicted in July of 2001, just before the Congress enacted the USA PATRIOT Act. This Act amended some of the pertinent sections.

If one looks at a current copy of the Criminal Code, some of the key sections have changed since July of 2001, when Councilman was charged. The law that applies to Councilman is the pre-PATRIOT Act version of the Criminal Code.

The majority of the three judge panel relied in its analysis upon a clause that was deleted by § 209 of the PATRIOT ACT. Moreover, the amending language was also sunsetted by the PATRIOT Act. And furthermore, the Congress is now considering bills that may extend the sunsetted provisions.

Wiretap Act. The count of the complaint at issue alleges conspiracy to violate the Wiretap Act. 18 U.S.C. § 371 is the conspiracy section. 18 U.S.C. § 2511 bans unauthorized intercepts of wire, oral and electronic communications.

That is, Title 18 of the U.S. Code is the Criminal Code; Chapter 119 of Title 18 is titled "Wire and Electronic Communications Interception and Interception of Oral Communications"; and, §§ 2510-2522 comprise Chapter 119. Chapter 119 pertains to wiretaps. § 2510 contains definitions. § 2511 makes it a crime to "intercept" any "wire, oral, or electronic communication".

18 U.S.C. § 371 provides that "If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both."

18 U.S.C. § 2511(1) provides, in part, that "any person who (a) intentionally intercepts, endeavors to intercept, or procures any other person to intercept or endeavor to intercept, any wire, oral, or electronic communication ... shall be punished as provided in subsection (4) or shall be subject to suit as provided in subsection (5)."

18 U.S.C. § 2510 contains definitions of "wire communication", "electronic communication", and "intercept".

§ 2510(1) now provides that a "wire communication" means "any aural transfer made in whole or in part through the use of facilities for the transmission of communications by the aid of wire, cable, or other like connection between the point of origin and the point of reception (including the use of such connection in a switching station) furnished or operated by any person engaged in providing or operating such facilities for the transmission of interstate or foreign communications or communications affecting interstate or foreign commerce".

However, the enactment of the PATRIOT Act deleted an additional clause that provided that "and such term includes any electronic storage of such communication". This was accomplished by § 209 of the PATRIOT Act. § 209 made other noteworthy changes. § 209 is one of the sunsetted provisions. Both the House and Senate have approved bills that permanently extend § 209, without modification. The Senate approved S 1389 on July 29, 2005. The House approved HR 3199 on July 21, 2005. See also, story titled "House Approves PATRIOT Act Extension Bill" in TLJ Daily E-Mail Alert No. 1,180, July 22, 2005.

§ 2510(14) provides that "electronic communication" means "any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce, but does not include ... (A) any wire or oral communication".

§ 2510(4) provides that an "intercept" means "the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device".

These above quoted sections pertain to unlawful wiretaps. The Wiretap Act also contains procedures that the government must follow to conduct lawful wiretaps. See especially, 18 U.S.C. § 2516, titled "Authorization for interception of wire, oral, or electronic communications".

Stored Communications Act. There is a separate legal regime for stored communications. That is, Chapter 121 of Title 18 is now titled "Stored Wire and Electronic Communications and Transactional Records Access". This is the Stored Communications Act (SCA). It was enacted as part of the Electronic Communications Privacy Act of 1986 (ECPA). §§ 2701-2712 comprise Chapter 121. It was amended by § 209 of the PATRIOT Act.

§ 2701 contains the criminal prohibition. It provides that "whoever --
  (1) intentionally accesses without authorization a facility through which an electronic communication service is provided; or
  (2) intentionally exceeds an authorization to access that facility;
and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system shall be punished ..."

But, § 2701(c) provides an exemption for "conduct authorized -- (1) by the person or entity providing a wire or electronic communications service". That is, an ISP or e-mail service provider can access stored e-mail without violating the SCA. And of course, the Councilman case is about the legality under the Wiretap Act of service providers accessing stored e-mail.

§ 2703 now provides, in part, that "A governmental entity may require the disclosure by a provider of electronic communication service of the contents of a wire or electronic communication, that is in electronic storage in an electronic communications system for one hundred and eighty days or less, only pursuant to a warrant ..." (Emphasis added. § 209 of the PATRIOT Act added the words "wire or".)

§ 209 of the PATRIOT Act provides, in full, as follows:

"Title 18, United States Code, is amended--
  (1) in section 2510--
    (A) in paragraph (1), by striking beginning with `and such´ and all that follows through `communication´; and
    (B) in paragraph (14), by inserting `wire or´ after `transmission of´; and
  (2) in subsections (a) and (b) of section 2703--
    (A) by striking `CONTENTS OF ELECTRONIC´ and inserting `CONTENTS OF WIRE OR ELECTRONIC´ each place it appears;
    (B) by striking `contents of an electronic´ and inserting `contents of a wire or electronic´ each place it appears; and
    (C) by striking `any electronic´ and inserting `any wire or electronic´ each place it appears."

The first thing that § 209 of the PATRIOT Act did was amend 18 U.S.C. § 2510, which is the definitional section of Chapter 119. It deleted the reference to stored communications in the definition of "wire communication". It deleted the clause "and such term includes any electronic storage of such communication".

The second thing that § 209 of the PATRIOT Act did was amend 18 U.S.C. § 2703, which is now titled "Required disclosure of customer communications or records".

US v. Councilman and VOIP Communications

8/11. The facts of U.S. v. Councilman involve the accessing e-mail communications by service providers. The briefing addresses e-mail. The Court's opinions address e-mail. However, there is also the related issue of accessing voice over internet protocol (VOIP) communications. See, full story.

2nd Circuit Affirms Dismissal of Uniform Cable Rate Class Action

8/11. The U.S. Court of Appeals (2ndCir) issued its opinion [37 pages in PDF] in Broder v. Cablevision, a class action case regarding the cable uniform rate structure requirement. The Court of Appeals affirmed the District Court's holding that it has removal jurisdiction, and its dismissal for failure to state a claim.

Cablevision Systems Corporation and CSC Holdings, Inc. (Cablevision) provide cable television services. Cablevision offered a discounted winter rate running from November through April to certain customers to enable the owners of summer homes to maintain their cable service at a substantially reduced rate during the winter season when customers use their summer residences only sporadically. Cablesvision informed its summer home customers of this rate when they asked to have their service cut off for winter months. It did not send written notice of this rate to all of its customers.

Gerald Broder is a class action plaintiff. He is a customer of Cablevision, with a summer residence, who did not know of the winter rate.

Broder filed a complaint in state court in New York against Cablevision alleging only state law causes of action: breach of contract, breach of the implied covenant of good faith and fair dealing, violations of Section 349 of the New York General Business Law (GBL), common law fraud, and unjust enrichment.

However, these causes of action rest upon allegations of violation of the federal uniform rate structure requirement, which is codified at 47 U.S.C. § 543(d), and the cable service disclosure requirement of Section 224-a(4) of the New York Public Service Law.

Cablevision removed the action to the U.S. District Court (SDNY), based upon federal question jurisdiction.

Broder moved pursuant to 28 U.S.C. § 1447(c) to remand the case to state court for lack of subject matter jurisdiction. The District Court denied this motion. Cablevision moved to dismiss for failure to state a claim upon which relief can be granted. The District Court granted this motion.

This appeal followed. The Court of Appeals affirmed.

First, the Court of Appeals held while Broder carefully drafted his complaint to allege state law violations, some of the causes of action actually plead both state and federal law violations. It reasoned that "What is styled as a single breach-of-contract claim actually has two distinct parts: (1) a claim that Cablevision breached one provision of applicable law, incorporated by reference into the contract, ``by failing to provide [Broder and the class members] with the uniform rates required by 47 U.S.C. § 543(d),´´ and (2) a claim that Cablevision breached another provision of applicable law, also incorporated by reference into the contract, ``by failing to provide them with the notice of the Winter Season rates as required under PSL § 224-a(4).´´" (Brackets in original.)

The Court of Appeals also wrote that "Similarly, what is styled as one claim for violation of GBL § 349 is actually two: (1) a claim that Cablevision violated 47 U.S.C. § 543(d) and thereby violated GBL § 349, and (2) a claim that Cablevision violated PSL § 224-a(4) and thereby violated GBL § 349."

It added that "Any doubt that Broder brings distinct claims based on 47 U.S.C. § 543(d) is dispelled by his request for a declaratory judgment establishing that Cablevision’s actions violated, inter alia, 47 U.S.C. § 543(d)."

It concluded that "The claims that invoke 47 U.S.C. § 543(d) are thus separate claims" for removal purposes, and since this case satisfies the three prong test announced by the Supreme Court on June 13, 2005, in Grable & Sons Metal Products, Inc., v. Darue Engineering & Manufacturing [16 pages in PDF], denial of Broder's motion to remand to the state court was proper.

Second, the Court of Appeals held that neither § 543(d) of the Communications Act, nor the cable service disclosure requirement of Section 224-a(4) of the New York Public Service Law, create a private right of action, and therefore, dismissal for failure to state a claim was proper.

The Court of Appeals added that "This conclusion does not mean that Broder and the putative class he seeks to represent are without a forum for their claims. It means only that they are without a judicial forum. As the district court noted, both Congress and the New York State legislature have provided administrative agency oversight for the sorts of claims asserted here. Broder and the other members of the putative class may seek relief from the New York Public Service Commission or the Federal Communications Commission."

This case is Gerald Broder v. Cablevision Systems Corporation and CSC Holdings, Inc., U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 04-4932-cv, an appeal from the U.S. District Court for the Southern District of New York, Judge Dennis Chin presiding. Judge Leonard Sand wrote the opinion of the Court of Appeals, in which Judges Cabranes and Raggi joined.

People and Appointments

8/11. Michael Powell, the previous Chairman of the Federal Communications Commission (FCC), joined Providence Equity Partners Inc.. It states in its web site that it is a "private investment firm specializing in equity investments in communications and media companies around the world". His predecessor, William Kennard, joined The Carlyle Group in 2001 as Managing Director in its Global Telecommunications and Media group. Also, on July 13, 2005, Colin Powell, the previous Secretary of State, was named strategic limited partner at the venture capital firm of Kleiner Perkins Caufield & Byers (KPCB). See, KPCB release.

More News

8/11. The Copyright Office (CO) published a notice in the Federal Register that "announces the termination of two proceedings under the Copyright Arbitration Royalty Panel system to distribute royalty fees paid by importers and manufacturers of digital audio recording devices and media who distributed these products in the United States during the period beginning January 1, 2002, and ending on December 31, 2003." The notice also announces that the CO "is also providing notice that the authority to make determinations regarding the distribution of the 2004 Digital Audio Recording Royalty Funds passed to the Copyright Royalty Board on May 31, 2005." See, Federal Register, August 11, 2005, Vol. 70, No. 154, at Page 46891.

Go to News from August 6-10, 2005.