The FCC recently slid up its chair to the fiscal feast that is cyber security and data breach regulation and took a hefty piece of the pie. In late October the FCC announced that it charged a record $10 million fine against two telecommunication companies after the telecoms reportedly posted the private information of nearly 300,000 people in a manner making the people eligible for identity theft. Taking a cue from the Federal Trade Commission (“FTC”), the FCC action was not based on any new set of concrete regulations or laws established to give organizations a minimum bar for data protection, but rather on existing FCC powers established under the Communications Act of 1934. The action serves as good warning not only to communications providers that the FCC will be examining data breaches and, more expressly, data storage issues, but also that in the absence of clear cybersecurity regulations, federal agencies will take an expansive view of their existing authority to address cybersecurity-related incidents involving companies subject to their jurisdiction.
Say what you will about inside-the-Beltway leadership vacuums, political gridlock and the indecipherable output from the grey, grinding gears of our government agencies, but once in a while Washington actually gets it right. Or mostly right.
Courts that have confronted the application of the “prior express consent” requirement of the Telephone Consumer Protection Act, see 47 U.S.C. § 227 – a.k.a., the TCPA – have in the main taken their cues from and adhered to the policy set by the Federal Communications Commission (“FCC”) – the federal agency charged with implementing the statute. Recently, however, two federal district courts departed from the FCC’s guidance and injected new uncertainty into TCPA enforcement and confusion over the process for review of TCPA interpretations. In Mais v. Gulf Coast Collection Bureau, Inc., and Zyburo v. NCSPlus, Inc., the Southern District of Florida and the Southern District of New York respectively overrode jurisdictional challenges to adopt statutory constructions in conflict with settled FCC policy that the voluntary provision of a telephone number constituted sufficient prior express consent under the TCPA for contacting consumers through prerecorded calls. These courts declined to follow a 2008 declaratory ruling from the FCC holding that “prior express consent” is manifest where a consumer provided a telephone number as part of a transaction. Both decisions pose substantial challenges to the FCC’s authority and ability to coordinate national communications policy under the statute that it is charged with administering with the predictable result of creating a cloud of uncertainty for those who must comply with the TCPA across multiple jurisdictions.
In recent separate actions, the Public Utility Commission of Ohio (“PUCO”) and the Louisiana Public Service Commission (“LPSC”) adopted comprehensive pole attachment regulatory regimes intended to facilitate the deployment of broadband communications infrastructure, and level the competitive playing field for broadband providers. Each stressed the need for reasonable and non-discriminatory access, clear access processes and timelines, a single unified pole attachment rate and efficient dispute resolution procedures. And each made clear that its rules apply to “wireless” attachments as well as traditional wire-based attachments.
In a stunning ruling issued on July 15, 2014, the U.S. Court of Appeals for the D.C. Circuit held that review by the Committee on Foreign Investment in the United States (“CFIUS”) and the subsequent unwinding of the investment deprived the foreign investor of due process under the 5th Amendment to the U.S. Constitution. Ralls Corp. v. Comm. on Foreign Investment in the United States, No. 12-cv-01513 (D.C. Cir. Jul. 15, 2014) (a copy of the opinion is here). If upheld, the ruling may require fundamental changes in how CFIUS conducts its reviews and may enhance foreign investors’ ability to influence or challenge the outcome of a review.
In Thomas v. Taco Bell Corp., No. 12-56458 (9th Cir. July 2, 2014) the Ninth Circuit Court of Appeals recently held that Taco Bell, one defendant in a putative class action lawsuit alleging violations of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, could not be held vicariously liable for text messages that it did not send or authorize without proof of an agency relationship. The unpublished decision is one of the first by an appellate court to address the issue of vicarious liability following the Federal Communications Commission’s (“FCC’s”) 2013 declaratory ruling in Dish Network.
As federal courts continue to grapple with the explosion of litigation brought by plaintiffs under the Telephone Consumer Protection Act (“TCPA”), the Federal Communications Commission (“FCC”) is increasingly being called upon to address complex questions arising from the application of this analog statute to the digital world. The latest example is a brief amicus curiae filed by the FCC in Nigro v. Mercantile Adjustment Bureau, LLC. In that case, Albert Nigro contacted a power company in New York to discontinue the service of his recently deceased mother-in-law and provided the company with his cell phone number in doing so. Thereafter, a debt collector (acting on behalf of the power company) called Nigro 72 times over a nine month period to collect on a $67 delinquency that remained on his mother-in-law’s account.
In a highly-anticipated decision, the Supreme Court last week released its decision in ABC v. Aereo, holding that the transmission of over-the-air broadcast signals by Aereo’s tiny antennas constitutes a “public performance” under the federal Copyright Act. Justice Breyer delivered the opinion for a divided Court. Justice Scalia dissented and was joined by Justices Thomas and Alito.
This is a story of persistence and perseverance, if not patience.
The cable industry finally obtained some control over skyrocketing pole attachment rates charged by cooperative utilities in North Carolina when the State’s Business Court ruled in favor of Time Warner Cable in Rutherford EMC v. Time Warner Entertainment/Advance-Newhouse Partnership on May 22, 2014. This was the first decision on the merits of a rate dispute under a 2009 North Carolina statute that gave the Business Court the responsibility to act on disputes related to cooperative and municipal utility pole rates. In deciding squarely for the cable operator, the Business Court ruled that the rate formula used by the FCC to determine reasonable pole rates “offered the most credible basis for measuring the reasonableness of [Rutherford’s] pole rates.” The FCC rates were determined to be in the range of $2.54 to $3.63 per pole annually during 2010-2013, in contrast to Rutherford’s rates in the range of $15.50 to $19.65. The court also found that the average rate in North Carolina charged by regulated investor owned utilities ranged from $5.91 to $6.06 in that same period. The court ordered that within 90 days the parties “negotiate and adopt new rates for the years 2010 through 2013 that are consistent with the reasoning of this Order.”
Following the D.C. Circuit’s decision in Verizon v. FCC, which struck down several key elements of the Federal Communication Commission’s 2010 Open Internet Order, the Commission yesterday released a Notice of Proposed Rulemaking (NPRM) that initiated a renewed effort to foster and protect an “open” Internet. In what is likely to become a highly-contested proceeding, the FCC is proposing regulations to guard against the “real threat” posed by the power of broadband providers while remaining within the bounds of its authority as recently clarified by the D.C. Circuit.