Firmwide Blogs

$400 Million in Savings Projected in 2013 for Lifeline Program

Wed, 13 Feb 2013 22:28:07 GMT

On February 12, 2013, the FCC released its most recent savings report, announcing that $214 million was saved in 2012 as a result of efforts to cut waste, fraud, and abuse from the Lifeline program. This is a $4 million increase from the last report, issued on December 19, 2012. See our entry on that report.... Continue Reading

$5 Minimum Fee Imposed by Georgia Commission

Thu, 17 Jan 2013 22:16:43 GMT

On January 16, 2013, in an acrimonious 3-2 vote, the Georgia PSC adopted revisions to its rule governing Lifeline service in the state (Rule 515-12-1-.35) to, among other things, institute a minimum monthly rate for lifeline service of $5 and to require Lifeline providers to review and retain a copy of a photo ID of... Continue Reading

“Golden Parachute Payment” Taxes Excessively Hard On Founders

Thu, 02 May 2013 00:00:00 GMT

Suppose you are the founder of a hot startup. You and your other co-founders have worked hard. You’ve been at it for years. And now, you have finally gotten what you have been working for. A healthy buyout offer. The kind of offer you want to take. You’ll be living differently in a few months, ...

27th Annual Retail Payments Institute — June 24-25

Thu, 02 May 2013 20:03:27 GMT

On June 24-25, the 27th Annual Retail Payments Institute (formerly Payment Card Institute) will convene in Arlington, VA. As competition within the payments industry stiffens and regulatory demands continue to increase, it’s critical that businesses stay in compliance. At this conference, key regulators and industry experts will delve into the best business practices to help payments industry... Continue Reading

50 State Survey of Gift Card Laws

Sat, 18 May 2013 15:41:26 GMT

The National Conference of State Legislatures (NCSL) recently released a chart that provides an overview of state gift card statutory requirements in all US states and territories as of mid-March 2013. While the chart is not exhaustive in its summary of each state’s law, it includes summaries of the state law sections that are often... Continue Reading

A Court Appointed Conservator is a “Public Official” and Must Prove Actual Malice

Tue, 08 Jan 2013 00:00:00 GMT

Advisory on When Food Production Leads to Prosecution

Sat, 09 Mar 2013 16:54:43 GMT

Over the last few weeks, two big stories have made headlines in the food industry. Beginning in early February, news media across Europe began reporting that food products tested in several European countries contained horsemeat, purportedly marketed as beef. The reports also indicated that it was highly likely that consumers had eaten this mislabeled, and in some cases tainted, product. A few weeks later, word came that the U.S. Department of Justice handed down a 76-count indictment against individuals formerly associated with the Peanut Corp. of America related to the company’s handling of a Salmonella outbreak in 2009. Both of these stories reflect the increased awareness of food issues among consumers, regulatory agencies and the media alike, and also provide lessons to be learned by food producers. The Peanut Corp. of America case is also part of a trend to criminalize conduct involving food safety that is alleged to present a danger to the public.

Are False Allegations of Homosexuality Still Libel, per se?

Fri, 05 Apr 2013 18:03:08 GMT

Ashley II Holdings Require Caution

Sat, 11 May 2013 16:48:45 GMT

Posted by Larry Burke

On April 4, 2013, the Fourth Circuit Court of Appeals issued a much anticipated decision in PCS Nitrogen, Inc. v. Ashley II of Charleston LLC, No. 11-1662 (4th Cir. April 4, 2013) (Ashley II). This wide-ranging decision is most notable for requiring buyers to be very careful if they wish to avail themselves to the protections... Continue Reading

Authorities Regarding GLBA Privacy and the FCRA

Thu, 21 Mar 2013 20:05:56 GMT

One of PLA’s missions is to facilitate knowledge-management for payments practitioners. Pursuant to that mission, PLA is today posting four fundamental, but not always easily accessed, authorities regarding GLBA privacy and the FCRA. Regarding GLBA privacy, we are posting OCC interpretative letters 910 and 917, which remain basic authorities for the interpretation of Section 12.... Continue Reading

Bill Would Create Lifeline Program Aimed at Broadband Support

Thu, 25 Apr 2013 18:45:01 GMT

On April 23, 2013 House Representative Matsui of California, along with other members of the House Energy and Commerce Committee, introduced “The Broadband Adoption Act of 2013.” The bill, if enacted, would direct the FCC to establish Lifeline support for broadband services for low-income customers, modeled after the existing Lifeline program. “The Lifeline program provides... Continue Reading

Bills on Use of Mobile-Device-Location Data Reintroduced

Wed, 27 Mar 2013 16:00:38 GMT

By Brad Guyton

Updating our entry on this issue posted during the last Congress, on March 21, 2013, lawmakers in the House and Senate reintroduced companion bills intended to curb government use of mobile users’ geolocation data. The reintroduced Geolocation Privacy and Surveillance Act is nearly identical to legislation introduced nearly two years ago, as described in our prior post. However, unlike two years ago, the bills are not accompanied by companion legislation requiring users’ permission for industry to share geolocation data, as was the case previously with the Location Privacy Protection Act of 2011.

The newly reintroduced Geolocation Privacy and Surveillance Act, sponsored again in the Senate by Sen. Ron Wyden (D-Or.) and in the House by Rep. Jason Chaffetz (R-Utah), would require the government and law enforcement agencies to obtain a warrant before accessing a person’s geolocation data, i.e., GPS information logged through Wi-fi networks and cellular towers. The legislation is modeled after existing wiretapping and electronic surveillance laws and would add to Title 18 of the U.S. Code a new chapter 120 entitled “Protection of Geolocation Information.”

Several exceptions would apply, including those for emergency responders, parents of minors, and intelligence investigations under the Patriot Act. In addition, the bill specifies that the Foreign Intelligence Surveillance Act and this legislation, if adopted, would be the only means by which geolocation information could be lawfully obtained by the government. The bills are expected to be referred to the Judiciary Committees in both chambers, neither of which acted on versions introduced in the previous Congress.

BLM Fails to Review Fracking Impacts of Oil & Gas Leases in California

Wed, 17 Apr 2013 00:55:39 GMT

Posted by Davis Wright Tremaine

From Allison A. Davis of our San Francisco Office: The U.S. District Court in San Jose recently found that the Bureau of Land Management (BLM) failed to adequately review the environmental impacts of fracking on four oil and gas leases it recently auctioned off in the Monterey Shale area of Monterey and Fresno counties in... Continue Reading

Broadband Pilot Launched for Lifeline Program

Thu, 20 Dec 2012 22:15:28 GMT

A recent FCC order announced that DWT client, Nexus Communications, Inc. d/b/a ReachOut Wireless, was selected as one of the fourteen participants in an FCC pilot project to expand the Lifeline program to funding broadband services. The Lifeline program currently subsidizes discounts on wireline and wireless voice telephony services. Like the other universal service programs,... Continue Reading

California District Court Finds National Security Letter Statute Unconstitutional

Fri, 22 Mar 2013 18:37:12 GMT

By Brad Guyton and John Seiver

Last week, in In re National Security Letter, the United States District Court for the Northern District of California found unconstitutional two sections of the federal law allowing the FBI to issue “National Security Letters” (“NSLs”) to secretly demand subscriber records from ISPs, telecom carriers and other electronic service providers when investigating international terrorism or conducting clandestine intelligence activities. An as-yet-unnamed telecommunications provider challenged the federal law and United States District Judge Susan Illston ordered the federal government to cease issuing NSLs and stop enforcing NSL gag orders, but stayed the order pending an expected appeal by the government to the Ninth Circuit.

The district court found the nondisclosure provision in 18 U.S.C. § 2709(c), as well as the judicial review provisions of 18 U.S.C. § 3511(b), unconstitutional on grounds that they violate the First Amendment and separation of powers principles. Under the nondisclosure provision, a recipient of an NSL may not disclose to anyone other than an attorney that the FBI has requested such records. The judicial review provisions at issue in the case specify certain limitations on a court’s discretion to modify or set aside an NSL nondisclosure requirement.

The district court followed the Second Circuit’s determination in a similar case decided in 2008, John Doe, Inc. v. Mukasey. In Mukasey the court found the nondisclosure provision was a prior restraint on speech about government conduct. As a content-based restriction, the district court here found the nondisclosure requirement violated procedural safeguards established by the Supreme Court in Freedman v. Maryland, and was not narrowly tailored to serve a compelling governmental interest. Specifically, the district court held that the nondisclosure provision neither required the government to initiate judicial review of the NSL disclosure order nor placed the burden of proof on the government once in court, and that the provision did not provide an adequate limit on the amount of time the gag order may be in place before it is subjected to judicial review. In addition, the district court ruled that the nondisclosure provisions were not narrowly tailored because they applied both to the content of the NSLs and to the mere fact that the recipient had received one, and that they were overbroad because they largely amounted to a permanent ban on speech due to the lack of temporal limitations on the nondisclosure requirement.

The district court also determined that the judicial review provisions in section 3511(b) imposed an unacceptably deferential standard of review, making it incompatible with the court’s ability and duty to review the types of speech covered by the nondisclosure orders. Noting that its review of nondisclosure orders would require a searching standard of review, the district court stated that the level of deference mandated by the statute contradicted the proper standard. Again agreeing with the Second Circuit, the district court determined that treating an FBI certification that disclosure would lead to an enumerated harm as “conclusive” was unconstitutional because it precluded meaningful judicial review, reducing the proper level of scrutiny to, in effect, no scrutiny at all.

Although Judge Illston largely followed the Second Circuit’s decision in Doe v. Mukasey, last week’s decision did not preserve the provisions by “conforming” them as the Second Circuit had. Instead, the court determined that the provisions were neither savable nor severable. It thus barred the government from issuing further NSLs under 18 U.S.C. § 2709 or enforcing the nondisclosure provision – not only in the instant case, but in any other case. (That said, as noted above, the court also stayed the order pending appeal, or for 90 days if no appeal is filed, so the ban on NSLs and further gag order enforcement will not take effect at this time.)

This decision is another challenge to the controversial NSL provisions in federal law and will surely be appealed to the Ninth Circuit and perhaps then to the Supreme Court.

California Money Transmitter Law Resources – Legislative Hearings and Public Comment

Sat, 23 Mar 2013 22:08:29 GMT

The California legislature recently held public hearings to discuss forthcoming California Money Transmission Act regulations. Amendments to the Act in 2010 have caused significant confusion in the marketplace because the act of money transmission was defined very broadly to include “receiving money for transmission.” This could be interpreted to include a large number of new companies and technologies... Continue Reading

Can We Please Talk About Outcomes for a Change???

Sat, 20 Apr 2013 23:54:39 GMT

Posted by Richard Glick

I get it that environmental groups place strict compliance with regulatory controls at a premium. After all, the standards are designed to be protective of the resource, and they are The Law, which must be obeyed. But I sometimes find it dismaying when people conflate immediate, measured and guaranteed compliance with ecological outcomes. They are... Continue Reading

Cap and Trade Auction Results Are In!

Wed, 22 May 2013 20:02:23 GMT

Every allowance that was offered in the auction was sold at a settlement price of $14.00 per allowance. The highest bid price was $50.01 with the mean bid price $16.67 and the median bid price $13.49. In total, the 2013 allowances sold at auction garnered $203,308,672. Of the 9,560,000 allowances offered in the advance … Continue reading →

Card Deals — Purchase and Sale Agreements

Tue, 19 Mar 2013 18:52:14 GMT

Adding to Payment Law Advisor’s online library of card deal agreements, we now post the purchase and sale agreements between Target and TD Bank, and between HSBC and Capital One. We hope these will be useful.

Cary Greene, Former General Counsel to WineAmerica, Joins Davis Wright Tremaine

Fri, 12 Apr 2013 18:38:43 GMT

Cary Greene, former general counsel to the influential association of U.S. wineries, WineAmerica, has joined Davis Wright Tremaine in its Washington, D.C. office. During his tenure at WineAmerica, Greene successfully supported the passage of winery direct-to-consumer shipping legislation in Maryland and Pennsylvania, and worked with distillers and brewers to defeat state and federal legislation that threatened to restrict the sale and distribution of alcohol beverages.

The addition of Greene marks the third major hire in DWT’s food and beverage practice in the past twelve months. Don Buder, a highly experienced transaction lawyer with deep experience in the food, beverage, and restaurant industries, joined the firm’s San Francisco office earlier this year. And Charles M. (Chip) English, who has extensive experience representing businesses and trade associations before the U.S. Food and Drug Administration and the U.S. Department of Agriculture, joined the firm in D.C. last year. To learn more about Cary Greene, and to read the full press release, click here.

City of Seattle and King County Agree to Major Upgrades to Settle Discharge Violations

Tue, 23 Apr 2013 18:55:52 GMT

Posted by Lynn T. Manolopoulos

To settle an enforcement action by the U.S. Environmental Protection Agency (“EPA”) and the State of Washington (“State”), King County and the City of Seattle have agreed to complete major upgrades to their local sewage and combined stormwater collection, piping and treatment systems to address allegedly illegal discharges. In addition, the County and City have... Continue Reading

Cloud Services and Related Big Data Issues Seminar — Seattle, April 29-30

Fri, 19 Apr 2013 13:29:28 GMT

As “the cloud” becomes ubiquitous for business and consumer applications, and harnessing “big data” presents novel challenges and opportunities, it is time for a deep dive into the implications of the cloud and big data for the global legal system. Are current legal structures adequate to define and enforce the rights and liabilities of cloud... Continue Reading

Commercial Distribution of News Content on the Internet by Media Monitoring Service Not a Fair Use

Tue, 16 Apr 2013 18:05:11 GMT

Commissioner Clyburn Sets the Record Straight on Lifeline

Sun, 17 Mar 2013 03:30:40 GMT

On March 15, 2013, FCC Commission Mignon Clyburn spoke to the Consumer Federation of America’s 2013 Consumer Assembly. In her remarks, she addressed the FCC’s recent reforms of its universal service rules, including the Lifeline program. The goal of universal service is to bring voice and advanced services to all Americans, a long-standing policy whose... Continue Reading

Compliance Plans Approved for Nine ETCs

Thu, 27 Dec 2012 22:24:07 GMT

On December 26, 2012, the FCC’s Wireline Competition Bureau (“WCB”) released a Public Notice announcing the approval of the compliance plans of nine wireless Lifeline ETC resellers: AirVoice Wireless, LLC; AmeriMex Communications Corp., Blue Jay Wireless, LLC; Millennium 2000, Inc.; Nexus Communications, Inc.; PlatinumTel Communications, LLC; Sage Telecom, Inc.; Telrite Corporation; and Telscape Communications, Inc.... Continue Reading

Congressional Hearing on Lifeline Set for April 25

Wed, 27 Mar 2013 23:56:16 GMT

The U.S. Congressional House of Representatives Committee on Energy and Commerce, which oversees the federal universal service program, sent a letter today to FCC Chairman Genachowski, notifying the agency that it will hold a hearing on the Lifeline program on April 25, 2013. Some of the questions raised in the letter likely to be addressed... Continue Reading

Congressional Proposal to Eliminate Lifeline Defeated

Wed, 27 Mar 2013 23:33:40 GMT

Last Friday, Senator David Vitter (R-LA) proposed an amendment to the U.S. Senate’s budget resolution which, if adopted, would have eliminated mobile phone services from the federal Lifeline program. The amendment was defeated by a vote along party lines, with the exception of Senator Claire McCaskill of Missouri as the only Democrat supporting the measure. ... Continue Reading

Consumer Financial Protection Bureau Begins Accepting Consumers’ Money Transfer Complaints

Sat, 04 May 2013 14:55:47 GMT

Noting that “[i]t’s pretty incredible that you can quickly send money to almost anywhere in the country or abroad,” the Consumer Financial Protection Bureau (“CFPB”) recently announced it has begun accepting consumer complaints regarding money transfers as part of its broader consumer complaint system. This adds money transfers to the growing list of financial products on... Continue Reading

Database Update: California Conditionally Permitted to Opt Out of National Lifeline Database

Tue, 05 Mar 2013 23:56:59 GMT

On March 4, 2013, the FCC Wireline Competition Bureau issued an Order conditionally granting certification of the California Public Utilities Commission (“CPUC”) to opt out of the National Lifeline Accountability Database (“NLAD”). The NLAD is intended to detect and eliminate duplicate Lifeline support provided to individuals and households and is expected to come online later this year. In the Order,... Continue Reading

Database Update: Texas Permitted to Opt Out of Lifeline Anti-Duplicates Database

Fri, 01 Mar 2013 15:36:23 GMT

On Feb. 27, the Public Utility Commission of Texas (“PUCT”) circulated notice to eligible telecommunications carriers in Texas that it has been granted permission by the Federal Communications Commission (“FCC”) to opt out of participation in the National Lifeline Accountability Database (“NLAD”). The NLAD is intended to detect and eliminate duplicate Lifeline support provided to individuals and households. ... Continue Reading

Database Update: Vermont Permitted to Opt Out of Lifeline Anti-Duplicates Database

Thu, 28 Feb 2013 17:10:59 GMT

On Feb. 15, 2013, the FCC Wireline Competition Bureau issued an Order granting the certification of the Vermont Department of Public Service to opt out of the National Lifeline Accountability Database (“NLAD”), which is intended to detect and eliminate duplicate Lifeline support provided to individuals and households. The NLAD is expected to come online later... Continue Reading

Dealing with Networks and Regulatory Compliance: The Legal Side of Mobile Retail

Wed, 17 Apr 2013 21:48:59 GMT

On April 16, DWT lawyers James Mann and Ronnie London presented on the topic of “Dealing with Networks and Regulatory Compliance: The Legal Side of Mobile Retail” at the RAMP Advanced Commerce and Mobile Retail Services Summit in Chicago. The presentation focused primarily on two topics: Why the Networks Are Here to Stay (and Some... Continue Reading

Dealing with Networks and Regulatory Compliance: The Legal Side of Mobile Retail

Wed, 17 Apr 2013 21:55:04 GMT

On April 16, 2013, DWT lawyers James Mann and Ronnie London presented on the topic of “Dealing with Networks and Regulatory Compliance: The Legal Side of Mobile Retail” at the RAMP Advanced Commerce and Mobile Retail Services Summit in Chicago.

The presentation focused primarily on two topics:

To view the full presentation, click here.

Delaware Franchise Tax Frights

Sat, 02 Mar 2013 00:00:00 GMT

I received the following email from a client the other morning: “Slight problem..…my Delaware franchise tax report says I owe $45,000.” For some reason Delaware likes to freak people out. If you do something typical like authorize 10 million shares, the front page of your Delaware franchise tax report will show some outlandish amount of ...

Director Fees Update: Substantial Nexus and the Property Factor

Tue, 26 Feb 2013 18:10:20 GMT

By Garry Fujita On August 27, 2010, we addressed the taxation of director fees in the article, Washington State B&O Tax on Director Fees. In that post, we addressed the substantial nexus requirement that is necessary before Washington may extend its B&O tax to director fees. We refer you to that August 2010 article for ...

Disputes Over MDU Access Persist

Sat, 20 Apr 2013 19:28:48 GMT

You would be forgiven if you thought the status of exclusive agreements for exclusive broadband cable service to “multiple dwelling units” such as condominiums and planned communities (MDUs) was settled. In 2007, the Federal Communications Commission (“FCC”) issued a ruling broadly declaring that such exclusivity agreements are “null and void,” and adopted a rule that prohibits the enforcement or execution of “any provision in a contract that grants to it the exclusive right to provide any video programming service (alone or in combination with other services) to a MDU.” We detailed the FCC’s exclusivity orders in previous posts here and here, and the court’s decision upholding the FCC on appeal here.

Despite the seemingly straight-forward application of this rule to ban exclusive MDU service, conflicts over broadband service to MDUs persist. The issue continues to surface both in negotiation of expiring agreements (where MDU management tends to demand compensation in exchange for exclusivity or simply tells the existing provider to leave and enters into a “non-exclusive” agreement with another provider) and in court disputes. At a recent FCC workshop promoting so-called gigabit networks, investors and service providers told the FCC that access to MDUs continues to be an obstacle to broadband deployment and investment.

Most recently, on April 5, 2013, in Lansdowne on the Potomac Homeowner’s Association v. OpenBand at Lansdowne, the United States Court of Appeals for the Fourth Circuit affirmed an order of the district court striking down an arrangement that gave a broadband service provider the exclusive right to provide video, voice, and Internet service to a large planned development. Exclusivity was assured through a convoluted series of entities and agreements designed to insulate the exclusive service rights from potential challenges under the FCC’s rule, which had been a proposal but not a rule when the agreements were structured.

The court concluded that the provider had “engaged in what amounts to an elaborate game of regulatory subterfuge featuring an array of procedural defenses, the use of various corporate entities to escape the definition of an OVS operator, and an artifice to evade the FCC order by structuring its exclusive arrangement using a web of sub-agreements.” The court declared the exclusivity provisions null and void as required by the FCC’s rule, and issued an injunction prohibiting their enforcement against the homeowners’ association and the homeowners themselves.

The Lansdowne case may discourage some developers and service providers from entering agreements designed to circumvent the FCC’s prohibition on exclusive service agreements. But because exclusive service is extremely profitable for the provider and affiliated developers, disputes are unlikely to disappear altogether.

Do We Really Have A Section 404 Permit?

Fri, 26 Apr 2013 00:04:52 GMT

Posted by Scott Broadwell

The United States Court of Appeals for the District of Columbia Circuit issued an opinion on April 23 in Mingo Logan Coal Co. v. United States Environmental Protection Agency upholding the Environmental Protection Agency’s (“EPA”) invalidation of a discharge permit issued four years prior by the United States Army Corps of Engineers (“USACE”). The decision effectively... Continue Reading

E-Commerce in the Cloud: Practical Tips for Structuring the Deal with a “Financial Institution”

Tue, 07 May 2013 13:00:20 GMT

At LSI’s recent Cloud Services and Related Big Data Issues Seminar in Seattle, WA, DWT’s Karen Ross presented on the topic of “E-Commerce in the Cloud: Practical Tips for Structuring the Deal with a ‘Financial Institution.’” Such tips included bringing in a banking lawyer early on, diagramming the flow of funds and data, determining which parties have... Continue Reading

EPA Releases Proposed Cleanup Plan for Lower Duwamish Waterway

Sat, 02 Mar 2013 17:03:59 GMT

Posted by Ame Wellman Lewis

Yesterday, EPA released a proposed plan for cleanup of the Lower Duwamish Waterway Superfund Site. The release kicks off the 105-day public comment period. EPA estimates that the cleanup will cost $305 million. Approximately 156 acres of contaminated sediments will be addressed using a combination of dredging, capping and enhanced natural recovery. The proposed cleanup... Continue Reading

ETC Applications for Wireless Resellers in Texas Now Handled by FCC

Thu, 22 Nov 2012 00:00:00 GMT

Texas has finalized the process of ceding jurisdiction over Eligible Telecommunications Carrier (“ETC”) designations for wireless resellers to the FCC. The amendment, adopted at the Texas Public Utility Commission’s (“PUCT”) November 16, 2012 meeting, and set forth in an order issued November 21, 2012 in Docket No. 40561, changed § 26.418 of the PUCT’s rules.... Continue Reading

Event: Come Talk Startup Public Policy with Congressman Rick Larsen!

Sun, 24 Mar 2013 03:01:27 GMT

Congressman Rick Larsen (@repricklarsen), who represents Washington’s 2nd Congressional District, has graciously agreed to come and talk to us about startup public policy. We are hosting this event at our Seattle offices, at 1201 Third Avenue, Suite 2200, in Seattle, on Tuesday, April 2nd, at 7:30 am in the morning. This event will be a ...

Event: Everything You Wanted To Know But Were Afraid to Ask, with Bill Bryant

Tue, 19 Mar 2013 17:24:41 GMT

Seattle VC and Angel Investor Bill Bryant (http://www.geekwire.com/2012/bill-bryant-time-startup/) has graciously agreed to come and talk to us this coming Wednesday morning. We’ve titled this event, Everything You Wanted To Know But Were Afraid to Ask. Come and ask Bill what you want to know about starting a tech company, pitching the idea to prospective investors, finding investors, ...

FCC Clarifies Companies' Liability for Third-Party Marketer TCPA Violations

Wed, 15 May 2013 22:08:55 GMT

By: Ronald G. London

The Federal Communications Commission (FCC) has issued a long-awaited declaratory ruling governing when a company is liable under the Telephone Consumer Protection Act (TCPA), and FCC telemarketing and autodialing rules, for violations committed by a third party that the company authorizes to sell its goods or services but does not directly ask or otherwise engage to telemarket, by holding that the company may be vicariously liable under federal common law principles of agency for TCPA violations that the third party commits.

The FCC ruling arises out of two TCPA cases involving telemarketing of Dish satellite TV services: one, a “private attorney general” case brought in Ohio federal court, Charvat v. EchoStar Satellite, and another brought by the United States for the FTC and Attorneys General from California, Illinois, North Carolina, and Ohio in Illinois federal court, U.S. v. Dish Network. Charvat sued EchoStar for calls made by independent contractors who had retailer agreements with EchoStar to advertise, promote and solicit orders for its programming, and to install and activate equipment for receiving it. EchoStar defended on grounds it did not place any illegal calls to Charvat, did not operate or control the equipment that initiated the calls, did not provide the retailers with phone numbers or instruct them to place calls, and – until Charvat filed suit – did not even know the retailers made the calls. The government suit involved similar issues.

The trial court dismissed the Charvat suit, but the U.S. Court of Appeals for the Sixth Circuit, after inviting input from the FCC, referred the question of EchoStar’s vicarious liability to the agency under the doctrine of primary jurisdiction. The Illinois court stayed its case pending FCC resolution as well. Petitions invoking the FCC’s declaratory ruling authority followed, resulting in the present order.

Even before Charvat, it had long been clear that under FCC (and Federal Trade Commission (FTC)) rules, when a company outsources telemarketing calls to be made on its own behalf, and the calls violate the law or rules, both the telemarketer and the company that hired it can be liable. The present ruling addresses what happens when a company simply allows others to market its goods or services, without instructing or encouraging them to telemarket, and the third party places non-compliant calls under the TCPA or hires a telemarketer that does so.

The declaratory ruling clarifies that such a company, i.e., the “seller” in TCPA parlance, is not directly liable unless it initiates the non-compliant call, but may be vicariously liable “under a broad range of agency principles, including not only formal agency, but also principles of apparent authority and ratification.” The FCC recognized that a seller can concurrently be a telemarketer and thus be directly liable for non-compliant calls – e.g., when it initiates a call on its own behalf, or when it is intrinsically involved in specific calls by third parties by, e.g., giving them specific and comprehensive instructions as to calls’ timing, manner, etc. However, beyond that, actions taken to benefit a seller by a third party, without more, do not trigger TCPA liability for the seller.

Rather, the FCC held, sellers may be liable for non-compliant conduct by third parties marketing the seller’s goods or services, if the seller is aware of “ongoing conduct encompassing numerous acts” by the third party, and the seller fails to terminate the third party and/or promotes or “celebrates” the third party’s conduct. In that circumstance, the seller has the ability, through its authorization to the third party, to oversee the conduct, even if that supervisory power is unexercised. In such cases, liability is determined based on “general common law” agency-related principles, rather than the law of any particular state, though it is not limited to classical agency principles, but rather also includes apparent authority and ratification as bases for vicarious seller liability.

Factors for when such liability attaches may include whether the seller grants a third party the ability to access data from or enter information into systems normally under the seller’s exclusive control (e.g., about the nature and pricing of a seller’s products/services, or customer information), the third party’s right to use a seller’s trade name, trademark, etc., and whether the seller approved, wrote or reviewed the third party’s telemarketing scripts. A seller is also responsible for unauthorized conduct of a third party that is otherwise authorized to market on the seller’s behalf, if the seller knows (or reasonably should know) the third party is violating the TCPA and/or FCC rules on the seller’s behalf, and fails to take effective steps within its power to halt that conduct, similar to how the FTC has imposed liability under its rules in the past.

These broad outlines will have to be tested by specific cases, but in the meantime, companies can protect themselves by exercising diligence in selecting and monitoring reputable marketers, and by including indemnification clauses in contracts with third-party marketers.

FCC Reports 2012 Recertification Results

Fri, 26 Apr 2013 19:29:02 GMT

Today, the Federal Communications Commission (“FCC”) released a Public Notice announcing the results of the 2012 Lifeline annual recertification process. In February 2012, the FCC required all eligible telecommunications carriers to recertify the eligibility of their subscriber bases as of June 1, 2012 by the end of 2012, and report the results to the Universal Service Administrative Company in January 2013. Subscribers who... Continue Reading

FCC to Study Pole Attachment Costs to Spur Gigabit Deployment

Tue, 30 Apr 2013 19:26:29 GMT

At last month’s Broadband Acceleration Initiative workshop, outgoing FCC Chairman Genachowski announced that the FCC would soon release a notice launching an inquiry into pole attachment costs as part of its effort to further reduce barriers to broadband build-out. This announcement followed on the heels of the Chairman’s issuance of the Gigabit Cities Challenge, which urges broadband providers and state and municipal community leaders to establish ultra-fast, affordable broadband connections in at least one community in every state by 2015.

Pole attachment delays and costs routinely have been cited by broadband providers as barriers to swift and ubiquitous deployment of networks. The Congressionally directed National Broadband Plan released in 2010 recognized that the cost of deploying a broadband network depends significantly on the costs that service providers incur to access poles, conduits and rights of way. The FCC sought to address these concerns in its April 2011 order (affirmed by the D.C. Circuit January 2013) lowering rental rates for telecommunications attachments and imposing timeframes on pole owners for processing attachment applications.

However, recent statements by small cable operators and broadband newcomers, including broadband grant recipients and Google, Inc. – that utility pole attachment practices factor into a company’s deployment decisions – appear to have prompted the FCC to take another look at pole attachment related costs and their impact on deployment of gigabit networks. Buford Media attributed its decision to shut down four systems in Arkansas and Texas to high costs for pole attachment fees. We will keep you apprised of any developments in this area, including when the notice initiating the FCC proceeding is released.

FDA Food Safety Rulemaking Tour Heads to the Northwest

Tue, 19 Mar 2013 21:07:08 GMT

The federal Food and Drug Administration (FDA) will hold a public meeting on FDA’s proposed food safety rules in Portland, OR on March 27-28. The rules implement portions of the recent Food Safety Modernization Act by imposing sweeping federal regulation of local farming practices and food processing operations across the nation.

The proposed rules are detailed and complex, but they ultimately provide little practical guidance to farmers and food processors. Instead, the rules give FDA broad discretion to make case-by-case determinations as to whether a business has adequately controlled food safety risks.

For example, the proposed rules include provisions to prevent contamination of produce by waste from wild and domesticated animals. The rules state that if there is a “reasonable probability” that grazing domesticated animals will contaminate crops, then a farmer must implement an “adequate waiting period” before harvest. See Proposed Sec. 112.82. The rule does not define “adequate waiting period,” but FDA’s commentary on the proposed rules states that FDA “would not expect it to be necessary” for the waiting period to exceed nine months. The proposed rules therefore give FDA discretion to dictate grazing and harvest schedules on farms utilizing both livestock and planted crops. This could be particularly problematic on organic farms that utilize chickens or goats for weed control.

Another related issue concerns discrepancies between FDA’s explanation of its rules and the actual text of the rules. For example, the proposed rules forbid the distribution of “produce that drops to the ground before harvest” unless the produce is subsequently treated to prevent contamination. Sec. 112.114. FDA asserts that this rule does not apply to tree nuts and other crops that are “dropped to the ground as a part of the harvesting practice.” The dropped produce rule, however, plainly applies to any produce that hits the ground before it is harvested. Unless amended, therefore, this rule could force changes in the production of crops such as Oregon hazelnuts that are harvested from the orchard floor after the nuts have naturally dropped to the ground.

Finally, the proposed rules contain intensive monitoring requirements and harsh consequences for the discovery of perceived food safety risks. For example, the proposed rules regulate all irrigation water that could come into direct contact with produce. Farmers using such water must test the water for E.coli bacteria every three months during the growing season and must immediately discontinue water use if any E.coli is found in the water. This requirement applies even when a growing crop will be subsequently washed or processed to eliminate bacterial contamination. A farmer may not resume irrigation until the farmer treats the water source or can prove that E.coli is no longer present in the water and is not likely to return. See Sec. 112.44-45.

The Portland meeting will provide an important forum for Northwest farm businesses to provide feedback to FDA on the proposed rules. FDA has little experience with agriculture and needs information about how its ideas will affect actual farms and farm businesses. Those unable to attend the public meeting may submit written comments to the FDA by May 16, 2013.

FDA Food Safety Rulemaking Tour Heads to the Northwest

Wed, 20 Mar 2013 16:15:55 GMT

Posted by Michael Gelardi

Federal Funding Available for Building Broadband Networks for Health Care

Wed, 17 Apr 2013 19:37:44 GMT

By Randy Lowe and Michael Sloan

Many healthcare providers (HCPs) do not have access to broadband facilities that are capable of supporting bandwidth-hungry telemedicine applications – either because it is simply unavailable or too expensive. Congress recognized this problem when it created the Health Care Support component of the Universal Service Fund. In December 2012, the FCC changed the program to make it more useful to HCPs seeking to expand their telemedicine offerings. Specifically, the FCC created the Health Care Connect Fund (HCF), which aims to distribute $400 million annually to rural HCPs and their non-rural partners.

The purpose of the HCF is to expand broadband access to HCPs and to encourage the development of state and regional broadband networks for telemedicine. The HCF will support the cost of (1) broadband and other advanced services; (2) upgrading existing facilities to higher bandwidth; (3) equipment necessary to create HCP networks or use broadband services; and (4) HCP-owned infrastructures where shown to be the most cost-effective option.

The HCF will allow eligible HCPs the option of purchasing services or designing and building networks if they can demonstrate that their choice is the most cost-effective option (the option for building new networks is available only to members of a consortium). Infrastructure funding, which is capped at $150 million each year, may be used in combination with services purchased from commercial service providers. Only consortia will be permitted to receive support for new infrastructure builds. Urban HCPs will be permitted to participate in those consortia with Rural HCPs so long as the Urban HCPs are not a majority of the participants. The HCF will pay 65 percent of eligible costs, with the participating HCPs required to pick-up the remaining 35 percent. While the HCP contribution obligation is not insignificant, the FCC specifically approved a variety of creative ways for HCPs to finance their 35 percent share of the costs.

Participants in the precursor to the HCF, the Rural Healthcare Pilot Program, can seek HCF funding beginning July 1 of this year. The FCC is expected to finalize the applications for the HCF by the end of the summer and funding will begin for new participants on January 1, 2014.

FFIEC Guidance on Social Media Use — Commentary from DWT

Wed, 13 Mar 2013 13:51:24 GMT

As noted in our post on January 29, the FFIEC recently proposed guidance on social media use (the guidance can be found here). DWT partner Andy Lorentz recently provided commentary on this development in the February 2013 issue of E-Commerce Law & Policy, noting that “The informality and real-time nature of many social media types... Continue Reading

FinCEN Issues Clarifying Guidance on “Convertible” Virtual Currencies

Fri, 12 Apr 2013 20:36:34 GMT

In response to the growing attention paid to “virtual currencies” of various types, FinCEN has issued guidance that attempts to clarify how FinCEN will apply the Bank Secrecy Act and its implementing regulations to this increasingly popular type of retail tender. The guidance is significant in that it provides the first such authoritative framework for... Continue Reading

First Oregon, Now Washington Water Quality Standards Under Attack

Sat, 09 Mar 2013 17:59:06 GMT

Posted by Richard Glick

On February 26, in a reprise of its partially successful assault on Oregon water quality standards, Northwest Environmental Advocates sent a Notice of Intent to Sue EPA for alleged violations of the Clean Water Act and Endangered Species Act. The alleged violations relate to EPA approval or inaction on water quality standards promulgated by the Washington... Continue Reading

Free Advice on OSHA Compliance!

Tue, 19 Mar 2013 23:27:44 GMT

Posted by Larry Burke

Oregon published a schedule of training dates on its website which are a convenient way to catch up on programs that your business needs. The folks from the agency are great to deal with in this setting and you may learn of areas where you actually do need to check with an attorney. Additionally, the... Continue Reading

Free Wireless Lifeline Plans Likely to be Approved in California

Mon, 30 Jan 2012 00:00:00 GMT

On January 29, 2013, the California Public Utilities Commission (“CPUC”) released two draft Resolutions proposing to approve free Lifeline plans for Nexus Communications, Inc. (Draft Resolution T-17389) and Assurance Wireless (Draft Resolution T-17388), both granted ETC Designation by the CPUC in 2011. If approved, these free plans would afford Lifeline Subscribers 250 minutes of use per month at no cost (after the federal subsidy of $9.25 is applied). This marks a departure from the CPUC’s existing policy that wireless Lifeline subscribers be required to pay a minimum of $2.50 per month in order to be eligible for Lifeline service. These Resolutions are slated for vote and the CPUC’s February 28th Business Meeting.

FTC Announces COPPA Rule Changes to Catch Up With Social Networks, Smartphones, and Other Developments

Wed, 17 Apr 2013 16:24:20 GMT

A MediaLaw Monitor Digital Exclusive

FTC Annual Letter to the CFPB

Wed, 15 May 2013 19:24:26 GMT

The FTC recently released its annual letter to the CFPB on recent FTC enforcement actions related to the Truth in Lending Act, the Consumer Leasing Act, the Electronic Fund Transfer Act, and the Equal Credit Opportunity Act. The letter’s greatest utility, though, might be found in its footnotes – a comprehensive collection of citations (with... Continue Reading

FTC Denies Requests to Extend Effective Date for COPPA Rule Revisions

Fri, 10 May 2013 18:32:05 GMT

Industry Must Comply by July 1, 2013, Can Look to Expanded FAQs for Guidance on Updated Rules for Information Collection and Disclosure, Parental Notice, and Requirements for Mobile Apps

By: Ronald G. London

The FTC has voted to retain the July 1, 2013 effective date for the revisions to its Children’s Online Privacy Protection Act (COPPA Rule), shortly after issuing revised “Frequently Asked Questions” (FAQs) to aid compliance efforts. The FAQs are a key interpretive resource, because there are few enforcement orders – and no real court precedents – that apply COPPA.

This post highlights some key clarifications and a few areas of uncertainty that remain in the FAQs, as a companion to our earlier advisory on the COPPA Rule revisions. Among other points, we explore guidance provided by the FTC staff in the FAQs regarding:

Generally, the FAQs underscore how COPPA’s coverage of websites and online services includes mobile apps, as well as “Web sites or online services that have actual knowledge [ ] that they are collecting personal information directly from users of another [ ] Web site or online service directed to children.” Other notable points among the changes to the FAQs, from those that were posted before the COPPA Rule revision, also include:

Definition of “Personal Information”

The revised FAQs highlight the addition of new items of “personal information” under the COPPA Rule, specifically:

The FAQs provide the following key qualifications and instructions about these categories of newly included personal information:

Definition of “Operator”

“Website or Online Service Directed to Children”

Parental Notice

Parental Consent Mechanisms

Confidentiality and Security Requirements

* * * *

Finally, the FAQs also provide important information about COPPA enforcement and how continuing questions about the Rule’s interpretation and applicability might be raised. In a somewhat noteworthy shift, the revised FAQs delete a statement from the prior FAQs that the FTC “monitors the Internet for compliance,” leaving enforcement to complaints generated by parents, consumer groups, industry members, and others who believe they have identified violations. The FAQs also herald the creation of a new “COPPA hotline” at CoppaHotLine@ftc.gov for questions or comments.

FTC Order Against Fraudulent Payment Processor Joins Growing List of Regulatory Actions Involving Third Party Service Providers

Wed, 20 Mar 2013 17:11:20 GMT

Following on the heels of significant regulatory actions by the Consumer Financial Protection Bureau, Federal Reserve, and the FDIC against regulated companies and their third-party service providers, the Federal Trade Commission recently announced a settlement order against a payment processor, as well as its principals (including one “John P. Lawless,” no joke). The defendant, Automated... Continue Reading

FTC Releases Long-Awaited Update to its 2000 Dot Com Disclosures Guide

Tue, 19 Mar 2013 20:09:08 GMT

The Federal Trade Commission (“FTC”) has released its revised guidance on the principles of advertising disclosures in the online marketplace. Entitled “.com Disclosures,” the new guidance enhances the FTC’s earlier Dot Com Disclosures guide, published in May 2000, to address over a decade of technological changes in e-commerce, including the significant increase in the use... Continue Reading

FTC Releases Report on Mobile Payments; Guidance on Addressing Issues in Mobile Carrier Billing, Privacy and Data Security

Thu, 14 Mar 2013 17:56:08 GMT

Earlier this month, the FTC released a Report highlighting some of the key issues in the mobile payments space, with particular focus on mobile carrier billing, privacy and data security, and international payments. The Report is based on various workshops held by the FTC on mobile technologies, and provides summary guidance on what issues companies... Continue Reading

FTC Solicits Input on Possible Ban of Payment Methods Preferred by Fraudsters

Wed, 22 May 2013 20:55:26 GMT

The Federal Trade Commission (“FTC”) announced today that it is seeking public commentary on proposed changes to the Telemarketing Sales Rule (“TSR”) that would ban the use of the following types of payments by telemarketers and telephone sellers: remotely created payments linked to a consumer’s bank account using unsigned checks or other payment orders payments using cash-to-cash... Continue Reading

GAO Audit Requested by Sen. McCaskill

Fri, 17 May 2013 23:22:15 GMT

Senator Claire McCaskill, a long-time critic of the Lifeline program, has sent a letter to the Government Accountability Office (“GAO”), requesting that it evaluate the FCC’s recent reforms. She requested that the GAO’s Forensic Audit and Investigative Service team examine the extent to which the reforms have been effective and whether further reforms are necessary. The letter... Continue Reading

Getting the Lead Out

Fri, 01 Mar 2013 16:06:15 GMT

As originally published in the Daily Journal of Commerce Lead’s adverse effects on people, particularly young children, have been reasonably well understood for decades. Children afflicted by lead poisoning can suffer permanent brain and nervous system damage. This can lead to a lower IQ, anemia, slower growth, and behavior, learning and hearing problems. Afflicted adults... Continue Reading

Guest Post: Global Expansion for Startups

Thu, 04 Apr 2013 12:26:44 GMT

Guest post by Steve Wilson, Osborne Clarke One of the clearest trends in recent years is that overseas expansion is becoming a consideration for every business almost from the point of start-up onwards. It used to be the case that you wouldn’t need to worry about overseas operations until you had a minimum of 3 ...

Guidance on the Use of Social Media for Alcohol Beverage Companies

Fri, 17 May 2013 21:40:51 GMT

By Cary Greene

On Monday, the Alcohol & Tobacco Tax & Trade Bureau (“TTB”) released new guidance on the use of social media by alcohol beverage companies. The Industry Circular explicitly equates “social media” with “advertising,” and suggests that advertising regulatory requirements, including statements and disclosures mandated by TTB rules, apply to social networks and video sharing sites.

The Circular does its best to take a practical approach to social media and holds industry members accountable mainly for what they themselves post or repost on their own websites, pages or apps. Postings by producers on sites maintained by other individuals or companies may also be advertising if the “totality of the message” leads to that conclusion. Mandatory statements are required on “profile” pages as well as on any data likely to become standalone material.

While the Circular does not directly refer to voluntary codes of advertising adopted by national wine, beer, and spirits trade groups, its publication should be a reminder of the importance of self-regulation and compliance. Apart from TTB, the Federal Trade Commission has also shown active interest in studying alcohol advertising online.

Handing Out Phones in Person Challenged

Sat, 18 May 2013 19:08:36 GMT

On May 16, 2013, the FCC issued a public notice seeking comment on a Petition for Rulemaking submitted by TracFone Wireless on May 13, 2013. The petition asks the FCC to prohibit carriers from distributing Lifeline-support phones through in-person methods. Doing so, TracFone claims, would reduce waste, fraud, and abuse in the Lifeline program by... Continue Reading

Holy Copyrightability Batman! The Batmobile Is A Superhero…

Wed, 10 Apr 2013 18:03:42 GMT

How Dilution Works

Fri, 15 Mar 2013 04:24:19 GMT

Sometimes founders will ask me the following question: “The founders stock will be equally diluted when we bring in new investment money, right?” And sometimes they will ask me: “When the company raises money, do we give some of our shares back to the company? How does it work?” Let me show you an example ...

How Many Shares To Authorize?

Fri, 08 Mar 2013 00:00:00 GMT

I am frequently asked this question: How many shares should my startup authorize in its charter (its Articles or Certificate of Incorporation)? The trite, short answer is—authorize enough. The longer answer is more nuanced, and basically boils down to—authorize enough to cover founder stock issuances (obviously), the equity or stock plan pool, reasonably foreseeable preferred ...

In Alaska, Oil and Gas Leases Convey Property Rights; Permits Do Not

Wed, 03 Apr 2013 18:50:02 GMT

The Supreme Court of Alaska held that the Alaska Constitution requires only one “best interest finding” that an oil or gas project is in the state’s best interest, although subsequent permitting decisions must be made after a “hard look” that considers cumulative impacts. Sullivan v. Resisting Environmental Destruction on Indigenous Lands (REDOIL), Decision No. 6769... Continue Reading

Incentive Stock Options vs. Nonqualified Stock Options

Fri, 17 May 2013 00:00:00 GMT

Companies and service providers to companies frequently confront this question. Which is better: an Incentive Stock Option (aka a statutory stock option) (an “ISO”) or a Nonqualified Stock Option (aka a Nonstatutory Stock Option) (an “NQO”)? What are the differences between these two types of equity awards? The table below summarizes the primary differences: Issue ...

IRS Guidance on “Beginning of Construction” for ATRA 2012 Tax Credit Extensions

Thu, 18 Apr 2013 23:10:49 GMT

Posted by Davis Wright Tremaine

DWT tax partner Pamela Charles reports: The IRS has issued guidance (Notice 2013-29) on satisfying the new “beginning of construction” requirement for the renewable energy production tax credit under Code Section 45 (PTC) and energy investment tax credit under Code Section 48 (ITC). These credits are available to qualifying projects if construction of the facility begins before... Continue Reading

IRS Revises Guidance on “Beginning of Construction” for ATRA 2012 Tax Credit Extensions

Fri, 03 May 2013 23:47:01 GMT

Posted by Davis Wright Tremaine

From DWT tax partner, Pamela Charles: Last month, the IRS issued guidance (Notice 2013-29) on satisfying the new “beginning of construction” requirement for the renewable energy production tax credit under Code Section 45 (PTC) and energy investment tax credit under Code Section 48 (ITC). The IRS has revised Notice 2013-29 to provide guidance clarifying the... Continue Reading

Is the FTC Opening a New Front in the War on Commercial Texting?

Sat, 09 Mar 2013 21:00:21 GMT

By: Ronald G. London

The Federal Trade Commission (FTC) recently announced it concurrently filed eight complaints in courts around the United States against “senders of spam text messages” who allegedly engaged in deceptive acts or practices by promoting supposedly free gift cards. The complaints constitute what the FTC called a “crackdown” on affiliate marketers who allegedly “bombard consumers with hundreds of millions of unwanted spam text[s],” in order to steer them to allegedly deceptive websites promoting the cards.

While the conduct alleged by the FTC details the kind of gambit that often draws the agency’s wrath, the cases are also notable because they allege that merely sending unsolicited commercial texts can be an “unfair practice” under the Federal Trade Commission Act. As texting is already heavily regulated by the Federal Communications Commission (FCC) under the Telephone Consumer Protection Act (TCPA), which also allows private causes of action, including class actions, the FTC’s apparent position seems to up the ante for senders of commercial texts.

The FTC’s deceptive “spam text” complaints collectively charged 29 defendants with sending a combined 180 million-plus unsolicited texts promising free gifts or prizes – including gift cards worth $1,000 at major retailers – to millions of consumers, many of whom, the FTC underscored, had to pay to receive the texts. The FTC alleged the texts had links that led to a “confusing and elaborate” online process that required recipients to provide sensitive personal information, apply for credit, or pay to subscribe to services to get the supposedly free cards. Upon providing their information, consumers allegedly were directed to another site and only at that point told that, to receive the gift cards, they would have to accept a number of “offers” – which could include recurring subscriptions charged to credit cards, and/or applications for credit – with the number necessary to proceed sometimes totaling a dozen or more. And even if consumers completed the offers, they were notified they had to find three others who also would complete offers before they would receive any gift card.

The FTC also alleged the landing sites collected a great deal of personal information – including health information, in some instances – before allowing consumers to continue, in many cases claiming the information was necessary to ship the gift cards. In truth, the FTC alleged, the information was sold to third parties for marketing purposes, making the claims about the need to collect the information deceptive.

In those regards, the FTC’s approach was consistent with its typical unfair and deceptive trade practice enforcement. But each of the eight complaints also includes a count that alleges:

[The] practice of procuring … the transmission of unauthorized or unsolicited commercial electronic text messages to the mobile telephones and other wireless devices of consumers … has caused or is likely to cause substantial injury to consumers that consumers cannot reasonably avoid themselves and that is not outweighed by countervailing benefits to consumers or competition[, which] … is unfair and violates Section 5 of the FTC Act.

In other words, it seems, procuring someone to send “unauthorized or unsolicited … text[s]” can itself be an unfair trade practice. While this might just be an additional way of otherwise trying to get at the bad actors in these cases, one can’t help but wonder how far the notion of unsolicited texts as unfair trade practice might be taken.

To that end, the FTC announcement of its enforcement actions stressed that the defendants sent text messages to random phone numbers, including, in up to 12% of cases, to consumers who do not have a text message subscription plan, the implication being that the recipients incurred costs to which they did not agreed. That is precisely the harm against which other laws regulating text messaging are designed to protect.

Indeed, the TCPA, as administered by the FCC (and interpreted by the courts) makes it unlawful to send text messages to mobile phones without prior express consent. And, as detailed in our entries last fall and spring, the FCC recently raised the consent bar for text messages that are “telemarketing” or “telephone solicitation” (i.e., those that are part of a plan, program or campaign to sell goods/services) to the more demanding and specific prior written, signed consent standard. Significantly, the text messages encompassed in the FTC’s crackdown would all seem to be solicitation, and as the FTC describes them, were not sent with any prior consent of the recipients (written and signed, or otherwise). That would seem to make them unlawful under the TCPA as well.

In the past, the FTC largely has left failures to acquire consent for texts to TCPA enforcement, and had even informally indicated it would not apply its telemarketing sales rule (TSR) to texts, only to voice calls. Yet in the fall of 2011, as we flagged, the FTC targeted unsolicited texts, and now it has again.

Meanwhile, the TCPA allows those who receive text messages to which they did not consent (and other TCPA-violative calls) to sue the senders, and provides for statutory damages of $500 – $1,500 if the texts were sent “willfully” (which the FCC and courts tend to find fairly easily). This has encouraged a healthy TCPA plaintiff’s bar, which of late has led to significant TCPA class action activity. In fact, depending on how one looks at it, and the source relied upon, TCPA actions are up anywhere from 50% to 80% over the past year. And these claims can lead to settlements in the double-digit millions of dollars if efforts to have them dismissed fail.

Adding the implications of the additional unsolicited-text-message counts in the FTC’s spam-text gift card complaints, it appears senders of commercial texts must potentially concern themselves with the FCC, the TCPA plaintiff’s bar and, now, the FTC. Together, these enforcement sources provide ample reason to be scrupulously careful about sending commercial texts only where the necessary consent is present.

Is Your Floating Home a “Vessel?”

Tue, 02 Apr 2013 22:31:26 GMT

Early this year, the United States Supreme Court decided a case that could have had far-reaching effects on local land use regulations affecting floating homes. However, the Court’s opinion in this case, Lozman v. City of Riviera Beach (No. 11-626), appears to have left most of these regulations intact—at least for the time being. The... Continue Reading

It Is Easy to Lose the Privilege Protecting Audit Documents

Fri, 22 Feb 2013 22:36:06 GMT

Posted by Larry Burke

In a recent case, documents related to an audit which was described in internal correspondence as being done to assess general compliance were not privileged in later civil litigation since the Court found: (1) the audit was conducted as a regular business activity; and (2) defendants could not establish that litigation was the “driving force”... Continue Reading

Legal and Technical Security Challenges for Cloud-Based Mobile Payment Solutions

Fri, 26 Apr 2013 19:42:06 GMT

DWT partner Randy Gainer will speak at the Electronic Transactions Association’s (ETA) upcoming Compliance Day on April 30 to address the topic of “Legal and Technical Security Challenges for Cloud-Based Mobile Payment Solutions.” Compliance Day kicks off ETA’s 2013 Annual Meeting and Expo. For more information about the event or to register, click here. For... Continue Reading

Legislation Introduced in Senate to Eliminate Lifeline Funding for Cellphone Service

Wed, 08 May 2013 18:58:32 GMT

Senators Vitter (R-LA) and Inhofe (R-OK) introduced legislation today to end Lifeline funding for cellphone service. While the text of the legislation has not been posted, in a statement about the bill Sen. Vitter said that the program “has expanded far beyond its original intent,” presumably referring to the decision to permit wireless prepaid carriers... Continue Reading

Lifeline Grows in Florida

Tue, 01 Jan 2013 22:20:16 GMT

In December 2012, the Florida Public Service Commission (PSC) released its Annual Report on the Lifeline program. This year’s report found that participation in the Lifeline program in Florida grew 9.7 percent from July 2011 through June 2012, due in part to the slow economy. As of June 30, 2012, over 1 million eligible Floridians... Continue Reading

Lifeline Rules Being Revised in Oklahoma

Sat, 09 Feb 2013 22:23:02 GMT

The Oklahoma Corporation Commission (OCC) issued two wide-ranging Notices of Proposed Rulemaking on December 19, 2012 to revise its universal service rules, with many proposals impacting Lifeline ETCs. In one (Cause No. RM 201200013), the OCC proposes new rules for Lifeline ETCs that would outlaw marketing from mobile locations; require free 611 dialing to customer... Continue Reading

Lifeline Savings Exceed $210 Million in 2012

Thu, 20 Dec 2012 22:21:40 GMT

On December 19, 2012, the FCC issued a Public Notice announcing that savings from the recent reforms of its Lifeline program totaled about $214 million in 2012, exceeding its $200 million target. Proclaiming that “eliminating waste, fraud, and abuse protects Lifeline’s mission of helping low-income Americans afford vital communications service,” the FCC said that the... Continue Reading

Lifeline Subscribers Targeted by FCC for the First Time

Sat, 16 Feb 2013 22:27:02 GMT

On February 13, 2013, the FCC Enforcement Bureau issued citations (sample) to eleven individual consumers with multiple Lifeline accounts. This marks the first time the FCC has taken action against individual subscribers for violations of the “one per household” rule that applies to Lifeline-supported services. The cases targeted by the FCC appear to be egregious... Continue Reading

Lifeline Subsidies a Significant Benefit According to Study

Sat, 18 Aug 2012 00:00:00 GMT

In a study titled “Subsidized Cell Phones Provide Significant Economic Gains for Poor and Near-Poor Americans,” Nicholas P. Sullivan, a fellow at the Center for Emerging Market Enterprises at the Fletcher School (Tufts University), investigates the economic impact a Lifeline-subsidized wireless phone has in the lives of low-income subscribers. The study concludes that subsidized cell phones are a significant economic tool for around half of subscribers, generating an average of $259 per year. In many high-population areas, this economic benefit exceeds the cost of Lifeline subsidies, meaning that the Lifeline program is paying for itself, even without taking other social and connectivity benefits into account.

Logging Roads Get A Pass – At Least For Now

Fri, 22 Mar 2013 23:47:01 GMT

Posted by David J. Ubaldi

Yesterday, in a 7-1 decision with Justice Scalia the lone dissenter, the U.S. Supreme Court handed a major victory to the forest products industry. As it does so often, the Court reversed a Ninth Circuit ruling that had required Clean Water Act (CWA) permits for sediment laden stormwater that runs off of logging roads. The... Continue Reading

Loko Liability: Claims Against Alcohol Beverage Manufacturer for Intoxication Injuries

Sat, 20 Apr 2013 18:17:38 GMT

By Ashley Watkins, Cary Greene, Chip English and Dave Ernst

Recently, the parents of a young man who died of alcohol poisoning filed a wrongful death suit against Phusion Projects, Inc., the company behind the “Four Loko” Beverage. This type of lawsuit against the manufacturer of an alcohol beverage is uncommon. Dram shop laws facilitate lawsuits against retailers for over-serving someone who subsequently causes a drunk- driving accident, but courts typically have not found a manufacturer liable for harms to the consumer caused by his own over-consumption. However, Four Loko has seen its fair share of this kind of litigation (see an overview of them in this insurance coverage lawsuit).

Four Loko was an innovative product, combining caffeine and malt liquor into a single beverage. While initially very popular, the drink came under attack after a string of incidents in 2011. In Washington, nine college students were hospitalized after consuming Four Lokos at a party, leading the Attorney General to push for a national restriction on the sale of the product. In the face of this backlash against the product, the company removed caffeine from its formulation, and added additional labeling on the can under pressure from the FTC.'

This latest complaint makes allegations under the Washington Product Liability Act. The complaint parrots two of the major criticisms of the product. First, that the 23.5 ounce drink contained the alcohol equivalent of up to four or five beers, rather than the one or two advertised. Second, that the combination of alcohol and caffeine allegedly prevented the consumer from feeling the effects of the alcohol, leading him to drink more than he otherwise would have.

On a case-specific level, the plaintiff’s claims must overcome a few hurdles. First, claims of defective design require a plaintiff to show that the product was unsafe to an extent beyond what a normal customer would contemplate. A jury could be asked whether an ordinary consumer would likely anticipate that a malt liquor drink could get them drunk, even with the presence of caffeine. While the presence of caffeine does add an additional hook for potential liability, a court may be hard-pressed to overlook combinations of caffeine and alcohol so readily accepted in other situations; bars and restaurants have been serving "rum and Cokes" or Irish coffees for years without facing these sorts of claims.

Beyond the case-specific analysis, the case raises a number of public policy concerns that relate to the beverage industry as a whole. Imposing liability in this instance rejects the “individual responsibility” approach often favored in American society. The pushback from Big Brother-type restrictions on drinking is what led to the repeal of Prohibition and the 21st Amendment (notably, the only amendment actually repealing a prior amendment).

While this complaint is unique to the particular issues related to Four Loko, it is worth following as it pertains to the treatment of new alcohol beverage products. Many other products have been met with allegations of dangerousness when first introduced onto the market, including malt liquor, wine coolers, and flavored malt beverages. It will be interesting to see how Four Loko charts its path following this latest round of litigation.

Manhattan Judge Dismisses Libel Claim Brought by Brooklyn Judge

Fri, 01 Feb 2013 00:00:00 GMT

Media Companies Successfully Fight for Access to Information About Church Officials’ Role in Priest Sex Scandal

Sat, 13 Apr 2013 18:02:22 GMT

Minnesota PUC Reminds Low Income Consumers to Recertify for Lifeline

Sat, 16 Mar 2013 18:18:50 GMT

On March 7, 2013, the Minnesota Public Utilities Commission (“PUC”) issued a public notice reminding eligible low income Minnesotans that they must re-certify their eligibility in order to continue to receive benefits under the federal Lifeline program and the state Telephone Assistance Program (“TAP”) for low income individuals. The PUC indicated that is has “received... Continue Reading

Mobile Payment Acceptance: Security Guidelines For Merchants

Sat, 02 Mar 2013 19:21:48 GMT

The PCI Security Standards Council recently issued security guidelines for merchants who accept mobile payments. The guidelines apply to payment acceptance applications that operate on any consumer electronic handheld device (a) that is not solely dedicated to payment transaction processing, and (b) where the device has access to clear text transaction data (customer names, card numbers, and transaction... Continue Reading

Mobile Payment Litigation Risks: Free Webinar

Tue, 26 Mar 2013 14:05:34 GMT

At 9 AM Pacific/12 PM Eastern on March 28, DWT partner Randy Gainer will present a free webinar entitled “Mobile Payment Litigation Risks.” Attendes will learn how: 1. Weak computer network and mobile security may permit theft of payment data 2. Businesses may collect user information from smartphones without sufficient user permission 3. Consumer class... Continue Reading

More Authorities Regarding GLBA Privacy and the FCRA

Tue, 30 Apr 2013 18:03:57 GMT

Last month PLA posted the FTC staff’s “Tatelbaum II” and “Gowen” letters, pursuant to PLA’s mission to facilitate the availability of important FCRA and other privacy-law authorities. PLA now posts the “Throne” letter, which is of both historic significance and continuing relevance. We believe that “Throne” remains relevant in downsell arrangements and, more generally, in... Continue Reading

Mythbuster! Some Things Really Aren't Better with Bacon!

Sat, 18 May 2013 20:16:59 GMT

People love to joke that everything is better with bacon – in fact, most people are not even kidding when they say this. Bacon, our once revered breakfast staple, is the now the ubiquitous compliment to nearly any food type. From bacon maple doughnuts to bacon flavored mayonnaise….we seem to love it. We even love the smell of bacon. A San Francisco restaurant (aptly named, “Bacon Bacon”) was forced to shut its doors because the bacon smells were overwhelming its neighbors and it turns out, the restaurant was not properly permitted. Read the full article here.

National Academy of Sciences Publishes Paper on Future Climate Change and Shifts in Growing Regions for Viticulture

Fri, 12 Apr 2013 21:10:09 GMT

By Peter Sergienko

In a paper published in the Proceedings of the National Academy of Sciences on April 8, researchers have projected changes in suitable growing regions for wine grape production in 2050 using runs on 17 different global climate models and assuming two different carbon emissions scenarios. The findings project major global geographic shifts in suitability for viticulture, with significant declines in traditional wine producing regions with Mediterranean climates such as Bordeaux, Rhone and Tuscany. Current suitability is retained in smaller areas, especially at higher elevations and in coastal areas. Increases in suitability are projected in more northern regions in North American and Europe.

Because climate stability is critical to all agriculture, it is important to look briefly at the greenhouse gas emissions scenarios incorporated in the models and to consider other scientific literature addressing climate stability, climate equilibrium, and the relative importance of both mitigation of and adaptation to climate change to put the study’s findings into context.

The two emissions scenarios considered in the study are “Representative Concentration (or Carbon) Pathways (RCP) 8.5 and 4.5. RCP 8.5 is a business as usual scenario with no coordinated global effort to cap and reduce global greenhouse gas emissions through the year 2100. More information concerning RCPs is here.

Notwithstanding all current voluntary and compulsory efforts by private businesses and individuals, states, local governments, and many countries to reduce greenhouse gas emissions, RCP 8.5 is a road to catastrophe. The effects of this scenario on wine grape production in 2050 are probably irrelevant because successful human adaptation to the changes in climate under this emissions pathway is unlikely.

RCP 4.5 is considered to be a “weak mitigation” emissions scenario. Notably, the projected global average temperature increase by 2100 under this scenario ranges from 2.25 to 4.11 degrees Celsius with a 53 percent chance of keeping the increase below 3 degrees Celsius. In general, all greenhouse gas emissions policies under consideration nationally and internationally are designed with the goal of keeping the temperature increase below 2 degrees Celsius. This goal is somewhat arbitrary and based on dated science. A safer goal is likely 1.5 degrees Celsius.
Whether or not the 2 degree Celsius goal is already beyond reach, mitigation to prevent as much warming as possible and to stabilize climate as soon as possible is critically important to wine grape growers and to all agriculture for two basic reasons.

First, as the study suggests, the lower the future greenhouse gas emissions are, the greater the chances of successful adaptation in place by changes in practices, such as water use for misting or sprinkling to reduce grape temperatures on the vine. Once adaptation in place becomes impossible, the only alternative is to move into new areas that are suitable for wine grape growing. This form of adaptation is fraught with many problems for current growers, including loss of existing land value and competition for new, suitable land.

Second, successful adaptation by moving into new areas that are suitable for viticulture (and for any crop) depends in large part on future climate stability. Recognizing that climate change is largely irreversible and, depending on emissions scenarios, climate stability may not be reached by 2100 or even 2200, let alone by 2050, is critically important to understand the priority and importance of mitigation over adaptation. If we have to move crops to new areas because of climate change, we certainly don’t want to move them every 30 or 50 years because the future climate is still unstable. A good article discussing climate stability and irreversibility with many links to source materials is here.

The most important aspect of the study is to make us look at probable future climate change and how it would impact a specific and vital agricultural industry. It is very difficult to envision the world in 2100 and beyond. Unfortunately, much of climate change discussion is taking place in that context. 2050 is within many of our lifetimes and certainly within the lifetimes of most of our children and grandchildren. If we want to preserve the opportunities for them that we have enjoyed, studies such as this make a compelling case for policies that will result in peak global greenhouse gas emissions no later than 2020 with significant annual emissions reductions to near zero by mid-century following the peak.

More coverage of the paper can be found in this article in The Guardian.

New Washington Supreme Court Opinion Makes Pre-Decisional Case Records Easier to Seal

Sat, 16 Mar 2013 00:00:00 GMT

New York's Love Affair with Portland Food Carts

Fri, 10 May 2013 22:23:16 GMT

The New York Times’ love affair with Portland, Oregon continues in this article that describes New York City’s byzantine regulatory scheme for food carts and ends with a shout-out to Portland, food cart nirvana.

NIST Hosts First of Four Planned Cybersecurity Framework Workshops

Fri, 05 Apr 2013 21:52:24 GMT

By Dan Reing

On April 3, 2013, the National Institute for Standards and Technology (“NIST”) hosted its first of four planned Cybersecurity Framework Workshops on April 3, 2013 at the Department of Commerce consisting of five panel discussions among a variety of private and public stakeholders affected by the Executive Order on “Improving Critical Infrastructure Cybersecurity” (“EO”) issued February 13, 2013. As we previously discussed, the EO set in motion a process to develop and implement a national, voluntary Cybersecurity Standards Framework aimed at protecting the nation’s critical infrastructure and the provision of essential services to the American people. The EO tasked NIST with drafting the Cybersecurity Framework, and on February 24, 2013, it issued a Request For Information (“RFI”) seeking public comment on issues the Cybersecurity Framework should address. The RFI comment period closes on April 8, 2013.

The objective of NIST’s first cybersecurity session under the EO was to convey its planned approach to developing the Framework, and eliciting ideas and participation from private industry in the RFI process and upcoming workshops. Toward that end, NIST indicated that the next three workshops are intended to be “hands-on,” “roll-up-your-sleeves” standards-development processes. The next workshop is scheduled for May 29th -31st at Carnegie Mellon University in Pittsburgh, with another workshop approximately six weeks later (mid-July), and the final workshop approximately six weeks later (around Labor Day).

NIST staff reiterated – several times – that it will rely heavily on input from private industry to guide the process, and that every comment will be read. Prior to the May workshop, NIST stated, it will review and consider all RFI comments, and undertake initial analysis to identify key commonalities and themes raised to identify key areas of concern. NIST intends to make this initial analysis publicly available before the May workshop, at which it plans to consider Framework development on three tracks: (1) Risk Management; (2) Cyber Hygiene; and (3) Tools and Metrics.

The overarching theme repeated throughout the day by industry and government panelists alike was the need for a Framework driven by industry in a collaborative process with the government. To that end, Patrick D. Gallagher, the Director of NIST, stressed that NIST’s goal is to gather current best practices, standards, processes, and ideas from industry stakeholders as a starting point, and that those responses must guide the Framework development at the subsequent workshops. Likewise, representatives from the Department of Homeland Security (“DHS”), which, among other things, is tasked with articulating performance goals for NIST, focused on presenting this process as a partnership between industry and the government. A common refrain from panelists across all sectors of industry was to ensure that the process does not attempt to “re-invent the wheel,” but instead to adopt, adapt and rely on practices and standards already in use. NIST staff made clear that the agency’s goal is to do just that, consistent with its prior practice.

Other common themes included industry representatives stressing that one size cannot fit all in any Cybersecurity Framework, and that whatever NIST ultimately adopts must be scalable, so that it is implementable and accessible for companies of all sizes. Another repeated refrain was that the Framework must be practical from a business perspective. It was widely accepted that adoption must be incentivized and presented as a matter of general risk management for which a business case can be made. To do that, several panelists stressed, the Framework must be in terms non-IT management and employees will understand, because those responsible for implementation will not always be IT professionals.

Many panelists also advocated the goal of adopting a flexible, evolving Framework so that it is adaptable to constantly changing threats, and that it should incorporate evolving best practices to prevent and respond to new cyber-attacks. Panelists also noted the Framework should consider international standards and how it will fit into the global cybersecurity world. Panelists also highlighted performance metrics as key factors to a workable Framework. Key questions for consideration included clearly identifying goals and establishing in advance what successful implementation will entail.

Bruce McConnell, Senior Counsel (Cyber) for the NPPD Department of Homeland Security, shared DHS’s current formulation of the goal for the Cybersecurity Framework: “Adoption of the framework will [ensure] … a high level of confidence that the essential services [an entity] provides will continue to be delivered to its critical customers in the face of most cyber incidents directly affecting the entity.” DHS acknowledged that to accomplish this, the Framework must include ties to incentives for adoption, and must have measurable compliance and performance standards. At the same time, the Framework cannot impinge privacy and civil liberty concerns – accordingly, DHS has established a task force to measure the impact on concerns according to the Fair Information Privacy Practices.

Finally, another common topic was information-sharing related to Cybersecurity breaches, threats, experiences, and practices – both from the government to the private sector, and vice versa. Workshop participants widely acknowledged that increasing and promoting information sharing will require legislative action in at least the liability, antitrust, and privacy arenas. Even beyond that, there must be considered a safe, anonymized way to share experiences about vulnerabilities and detection practices and operations that will not present further competitive or reputational risk. Toward that end, representatives of various industry Information Sharing and Analysis Centers (“ISACS”) on one panel offered ISACS as a good model for information-sharing, so long as legal impediments are surpassed.

Portland Requires Employers to Provide Paid Sick Leave Starting in 2014

Tue, 02 Apr 2013 19:02:58 GMT

By Carol Bernick

The Portland City Council has passed a paid sick leave mandate that requires employers to provide paid leave for employees to use for personal and family member illness as well as certain safety concerns. The new ordinance takes effect on Jan. 1, 2014. Employers who already offer paid sick leave or paid time off still need to review, and likely revise, their policies.

Detailed provisions related to accrual rates, carry-over, and other aspects of use and administration are included in the ordinance. There are required postings and record keeping. Employers not in compliance may be subject to enforcement by BOLI or through private lawsuits brought by employees.

Portland joins Seattle, San Francisco, Washington, D.C., and the entire state of Connecticut, all of which have similar requirements either in effect or set to take effect soon. Many other cities are considering similar legislation.

Importantly, this ordinance applies to any employer who has employees who perform work in the City of Portland, regardless of where the employer is headquartered or where the the employee primarily performs services.

Key aspects of the Portland ordinance include:

Covered employers: Employers with a minimum of six employees must provide paid leave as described below. Small employers—those with a maximum of five employees—must also provide sick time, but it may be unpaid.

Accrual rate: Employees must receive a minimum of one hour of paid (or unpaid for small employers) sick time for every 30 hours of work performed. Full-time exempt employees are presumed to work 40 hours per week.

Counting hours: The accrual is based on hours worked within the City of Portland. This includes employees not regularly employed in Portland but who occasionally perform services in Portland. All hours worked in Portland must be counted.

Carry-over and caps: Employees may accrue a maximum of 40 hours of sick time per calendar year and may carry over a maximum of 40 hours to the next year. If the employee is rehired within six months, the employee must have his or her previous accrued sick time restored.

Cash-outs: Accrued but unused sick time is not required to be paid out upon separation of employment.

Permitted uses of paid sick leave: The ordinance mandates leave for situations that go beyond ordinary sick leave. Employees may use this accrued leave:

Use of sick time: Employees may use sick time in increments of one hour, unless the employer allows less time and only for an otherwise qualifying absence from work performed in Portland.

Waiting period for new employees: Leave begins accruing immediately upon hire, but may not be used in the first 90 days of employment, unless the employer’s policies otherwise allow for earlier use.

Existing PTO and other paid leave: Employers who already provide paid sick time or other paid time off (“PTO”) do not have to provide additional leave as long as their sick time or PTO policies or practices meet the minimum accrual rates prescribed by this ordinance, and employees have access to the paid leave for the same reasons and in the same manner.

Non-retaliation and enforcement: Employees may not be retaliated against for exercising their rights under the ordinance. The ordinance will be enforced by the Oregon Bureau of Labor & Industries (BOLI).

Requiring verification: Employers may require documentation of illness if three consecutive days of leave is used. The employer must pay any cost not covered by insurance of obtaining such documentation. It is not clear how these verification provisions of the ordinance will be reconciled with different rules under the FMLA related to shorter absences and healthcare provider certifications of serious health conditions.

Regulation deadline: The administrative rules governing implementation of the sick leave code must be adopted before Aug. 31, 2013.

Posting requirement: Employers must provide and post notice of employee rights under the ordinance. The notice must be in in English and other languages used to communicate with the employer’s workforce. The city will be preparing a template. Use of a poster is also an acceptable form of notice.

Recordkeeping: Employer must keep records documenting hours work and sick time accrued and used by employees for at least two years.

Davis Wright Tremaine will be monitoring this ordinance, including the publication of proposed regulations. Employers who have questions or concerns, or who wish assistance in providing input on the regulations, are invited to contact us.

President Obama Signs Video Privacy Protection Act Amendment

Wed, 27 Feb 2013 00:00:00 GMT

Preventing Damages to the Bank and its Customers from Account Takeover Fraud

Wed, 08 May 2013 08:00:55 GMT

On May 7, 2013, DWT partner Randy Gainer gave a presentation to the Bank Executive Management Committee on the topic of “Preventing Damages to the Bank and its Customers from Account Takeover Fraud.” His presentation touched on the following issues: What is account takeover fraud? How can such fraud damage the Bank and its customers?... Continue Reading

Proposed EPA Rules to Help Smaller RIN Sellers

Wed, 27 Feb 2013 19:45:12 GMT

Posted by Richard Glick

On February 21st, EPA proposed new rules under the Renewable Fuel Standard Program (RFS) intended to improve market conditions for Renewable Identification Numbers (RINs). The RFS allows producers and importers of renewable fuel to generate RINs to sell to petroleum refiners and importers, which the latter uses to show compliance with renewable fuel requirements. Under the... Continue Reading

Proposed Oregon Law to Allow Wine Growlers at Restaurants and Stores Advances in Salem

Wed, 06 Mar 2013 18:00:11 GMT

DWT developed the concept and wrote this bill for the Oregon Winegrowers Association. We hope that this becomes model legislation for our winery and brewery clients in other states as well.

See the KGW news report, featuring our clients Chehalem Winery and Hopworks Urban Brewery.

Qualifying Advanced Energy Project Program: IRS Announces Second Phase

Fri, 22 Mar 2013 16:38:16 GMT

Posted by Davis Wright Tremaine

DWT tax partner Pamela Charles reports: Last month, the IRS announced the second phase of the qualifying advanced energy project program to distribute the Section 48C tax credits that are available for reallocation now that the first phase of the program has been completed (see IRS Notice 2013-12). To be considered for an allocation of credits in... Continue Reading

Question & Answer: IP Assignment Agreement

Wed, 13 Mar 2013 02:55:03 GMT

Question: I had some friends help me in the very early stages of my startup. For example, one of them helped design our logo. Another one helped me with an instructional video explaining our product (the video can now be found on YouTube). I hate to be obnoxious, but should I have these folks sign ...

Regional Transmission Organizations Can Be a Bellwether for Wireless Attachers on Transmission Towers

Fri, 19 Apr 2013 19:31:36 GMT

Throughout the nation, wireless carriers attach their facilities to electric transmission towers, despite the fact that they do not have statutory rights to do so. The rights of wireless carriers to attach to electric facilities generally stems from the federal Pole Attachment Act, as amended by the Telecommunications Act of 1996 (“the Act”), codified at 47 U.S.C. § 224. While wireless carriers have rights to attach under the Act, carrier rights do not extend to transmission towers. Southern Company v. Federal Communications Commission, 293 F.3d 1338, 1343-46 (11^th Cir. 2002). This lack of rights gives transmission tower owners significant bargaining power over wireless carriers and often results in unbalanced license agreements heavily skewed in favor of the tower owner.

For example, license agreements typically subordinate the wireless attacher’s use of space on transmission facilities to the needs of the tower owner. It is not uncommon to find provisions requiring an attacher to remove or relocate its equipment upon 90 days’ notice from the tower owner when the owner needs the space for its own use or planned future uses. Removing wireless facilities in such a short time frame can severely hamper a wireless carrier’s ability to locate, secure, obtain permitting for and construct an alternative site in order to ensure continuous coverage.

Wireless carriers in New Jersey were forced into such a situation just last year when Public Service Gas and Electric Company (“PSE&G”) sent 90 day removal notices to wireless attachers along a transmission path that had been slated for replacement. PSE&G had no plans for temporary or permanent relocation of the wireless attachments on other PSE&G facilities. Given the timeframes for local zoning and permitting, the wireless carriers had no reasonable means for ensuring that coverage and service (including access to emergency services) would not be compromised. The wireless attachers were compelled to raise the issue with the New Jersey Board of Public Utilities, which in turn led to a settlement in which PSE&G agreed to cooperate with the wireless attachers to ensure wireless coverage would not be interrupted.

There is a relatively simple way for wireless attachers to ensure they are not caught off guard in such situations. In order to better anticipate a transmission tower owner’s future planned use of facilities to which they are attached, wireless carriers should monitor the planning processes of the Regional Transmission Organizations (“RTOs”). RTOs are entities approved by the Federal Energy Regulatory Commission (“FERC”) to both operate transmission networks in centrally dispatched control areas, and maintain reliability within established reliability standards. Most electric companies across the country have turned over the operational control of their electric transmission systems to RTOs. In order to ensure the transmission system will continue to meet reliability standards, the RTOs will typically engage in regional transmission planning processes to determine when transmission facilities will need to be upgraded and/or replaced. These planning processes are open to the public. Wireless attachers can and should monitor these planning processes in order to know in advance when an RTO will require transmission tower owners to replace facilities. In this way wireless attachers will be in a better position to work with tower owners in advance of receiving removal/relocation notices.

Regulatory Issues Cause ConocoPhillips to Join Shell Oil in Suspending its Drilling Program in Arctic Waters off Alaska

Thu, 11 Apr 2013 21:26:34 GMT

Posted by Mike Jungreis

Today, ConocoPhillips announced that it is suspending its drilling program in the Chukchi Sea off the northwest coast of Alaska for 2014, due to uncertainty regarding the changing regulatory requirements. “While we are confident in our own expertise and ability to safely conduct offshore Arctic operations, we believe that more time is needed to ensure... Continue Reading

Rural Territory Now Easier to Serve: FCC Waives Requirement to Serve Entire Rural Service Area

Wed, 17 Apr 2013 19:14:11 GMT

On April 15, 2013, the FCC released an Order granting forbearance to Lifeline-only ETCs from the requirement that these ETCs serve the entirety of rural service areas. Previously, in order for a Lifeline-only ETC to provide service in a rural area, the ETC would have to commit to offer service throughout the territory served by... Continue Reading

Seattle Merge Briefing, March 12, 2013

Sat, 09 Mar 2013 03:29:57 GMT

Date & Time: Tuesday, March 12th, 2013 2:30 pm to 4:00 pm Location: Davis Wright Tremaine LLP 1201 Third Avenue, Suite 2200 Seattle, WA 98101 REGISTRATION REQUIRED Use DWTSEA2013 to receive complimentary registration. Interested in the M&A market? Get educated! Selling your tech company is about changing your life and achieving a dream. However, while ...

SEC Fires Another Salvo in the “Finder” Debate

Sat, 18 May 2013 15:56:27 GMT

The SEC recently issued orders against two individuals and a company and, in doing so, continued the debate over what conduct requires someone acting as a “finder” to be registered as a broker or dealer or associated with a registered broker or dealer. This new guidance makes clear that the SEC takes a hard-line position ...

Section 1045: Let’s Fix It

Wed, 17 Apr 2013 01:31:27 GMT

If Congress is on the hunt for ideas to make life better for startups and emerging growth companies, here is another: “Amend Section 1045 of the Internal Revenue Code to extend the 60 day rollover period to 6 months.” First Off, What Is Section 1045? Section 1045 is a tax code section that allows non-corporate ...

Section 1603 Cash Grant Modified Annual Report Form

Sat, 04 May 2013 16:46:03 GMT

Posted by Davis Wright Tremaine

From DWT tax partner, Pamela Charles: Recipients of Section 1603 cash grants are required by the Terms and Conditions of the program to provide annual project performance reports to the Treasury Department for the first five years after the project is placed in service. Beginning May 13, 2013, the Treasury Department will have a modified... Continue Reading

Security of Payment Card Data on Cloud-Based Mobile Payment Platforms

Sat, 30 Mar 2013 19:08:13 GMT

The attached presentation entitled “Security of Payment Card Data on Cloud-Based Mobile Payment Platforms” was given by DWT partner Randy Gainer at American Conference Institute’s 5th National Forum on Emerging Payments in San Francisco, CA on March 21, 2013. The presentation covered topics including: Cloud-based mobile payment solutions What is the cloud? Some benefits of moving to... Continue Reading

Senator Pryor Calls for Radical Changes to the Lifeline Program

Sun, 17 Mar 2013 03:00:57 GMT

On March 13, 2013, Senator Mark Pryor (D-Ark.) sent a letter to FCC Chairman Genachowski to “express concern about the state of the Lifeline program” and asking the FCC to “immediately” make radical changes to the program. The senator, who is a member of the Senate Committee on Commerce, Science and Transportation, which is responsible... Continue Reading

Senator Wyden Urges FERC to Support Regional Flexibility in Order No. 1000 Compliance Filings by Northwestern Utilities

Thu, 07 Mar 2013 00:58:22 GMT

Posted by James (Jim) Mitchell

From Jim Mitchell of our DC office and John Cameron of our Portland office: In a letter to FERC Chairman Jon Wellinghoff dated March 5, 2013, Senator Ron Wyden (D-OR), the new Chairman of the Senate Energy and Natural Resources Committee, strongly urged the FERC to support principles of regional flexibility when reviewing filings by... Continue Reading

Social Media and Financial Services: Convergence or Collision?

Fri, 22 Mar 2013 22:05:19 GMT

The attached presentation entitled “Social Media and Financial Services: Convergence or Collision?” was given by DWT partner Andy Lorentz at American Conference Institute’s 5th National Forum on Emerging Payments in San Francisco, CA on March 21, 2013. The presentation covered topics including: •Social Media – by Depository Institutions •Peer to Peer Payment Offerings •In-Stream Payments... Continue Reading

Social Media: What You Need to Know to Meet New Regulatory Expectations

Fri, 26 Apr 2013 17:34:15 GMT

On April 23, 2013, DWT’s Peter Luce presented on the topic of ”Social Media: What You Need to Know to Meet New Regulatory Expectations” during a webinar sponsored by the Bank Safety and Soundness Advisor. The presentation covered the following topics: What the new FFIEC rules require How to develop an air-tight social media policy How some... Continue Reading

Social Media: What You Need to Know to Meet New Regulatory Expectations — April 23 Webinar

Tue, 16 Apr 2013 21:45:25 GMT

Webinar, April 23, 2-3:30 PM Eastern. Using social media in your bank can have significant marketing and recruitment value. It can also bring outsized reputation risk and regulatory risk to your institution, too. Larger banks keep teams of lawyers on staff to help mitigate the fallout from a misguided social media message, but smaller financial... Continue Reading

Sprint Filing Profiles Typical Lifeline Subscriber

Wed, 17 Apr 2013 17:27:00 GMT

In advance of Congressional hearings next week, Sprint Nextel filed with the FCC a snapshot of its Virgin Mobile/Assurance Wireless Lifeline subscriber base, providing insight into the demographic characteristics of Lifeline participants. Sprint’s filing revealed that its average Lifeline subscriber is a 47 year-old woman with a household income of less than $14,000 per year. More than... Continue Reading

States Consider Legislative Proposals Regulating Toxic Chemicals in Consumer Products

Thu, 18 Apr 2013 22:58:25 GMT

Posted by Peter Sergienko

There is high and growing concern among the general public regarding adverse health effects from exposures to toxic chemicals in consumer products, especially from exposures to children. These concerns initially came to a head in the mid-2000s, resulting in passage of the federal Consumer Product Safety Improvement Act of 2008 (CPSIA). CPSIA imposed numerical limits... Continue Reading

Stock Option Exercise Checklist

Wed, 27 Mar 2013 03:05:48 GMT

Congratulations, you’ve gotten your company off the ground. You’ve incorporated, issued founder shares and filed 83(b) elections, adopted a stock option plan, granted stock options, and been working on your business for a while. Now an employee who has been with you since the start wants to exercise a stock option that has vested in ...

Testimony Posted in Advance of Congressional Lifeline Hearing

Fri, 26 Apr 2013 10:48:14 GMT

As discussed in our earlier blog post, the sub-committee of the U.S. House of Representatives charged with overseeing the telecommunications industry (the Subcommittee on Communications and Technology, Committee on Energy and Commerce), will hold a hearing today to discuss the federal Lifeline program. In advance of the hearing, the witnesses who will testify have submitted... Continue Reading

The 10 Biggest Regulatory Potholes for Food Service Franchises

Wed, 08 May 2013 15:51:16 GMT

By Rochelle Spandorf and Laura Warf

The foodservice industry’s leading news source, Nation’s Restaurant News, is currently conducting a survey asking readers to choose among eight regulatory issues for the one they think will have the biggest impact on food service businesses in the next two years: menu labeling; soda/ingredient bands; health care reform; tax reform; immigration; mandatory paid time off; minimum wage; or environmental issues. We’ve added two more regulatory potholes to the list: food safety and ADA. Click here for the 10 biggest regulatory potholes for food services franchises today.

The Alaska Constitution and Alaska Oil and Gas Projects

Tue, 09 Apr 2013 17:07:40 GMT

Posted by Lisa Doehl

In the March 29th decision of Sullivan v. Resisting Environmental Destruction on Indigenous Lands (REDOIL), the Supreme Court of Alaska held that the Alaska Constitution requires only one “best interest finding” (that an oil or gas project is in the state’s best interest) to be made before a lease is issued, though subsequent permitting decisions... Continue Reading

The Rule Against Entrepreneurs

Wed, 03 Apr 2013 22:09:57 GMT

You may have heard of the Rule Against Perpetuities. Maybe. If you went to law school. It is an absurd old rule, crafted by the English common law courts years and years ago. But have you heard of “The Rule Against Entrepreneurs”? Maybe not, because I am just coining the phrase right now. Let me ...

The United States Allocated 40% of Liability for Contamination Caused by a Contractor’s Manufacturing Operations

Thu, 21 Mar 2013 17:36:42 GMT

Posted by Davis Wright Tremaine

From Lynn Manolopoulos of our Bellevue office and Scott Broadwell of our Anchorage office: A recent decision by a federal court in the Central District of California found the United States liable for 40% of the response costs related to contamination from the manufacture of ammunition and rocket motors for the United States under governmental... Continue Reading

The X’s and O’s of Mobile Payments

Sat, 16 Mar 2013 17:09:25 GMT

On March 14, 2013, Davis Wright Tremaine partner Andy Lorentz teamed up with BetterBuyDesign’s Steve Mott to present the X’s and O’s of Mobile Payments at DWT’s Game Time at Restaurant High 2013, an invitation-only event for high-level restaurant executives to learn about key developments in the industry and look toward what the future holds.... Continue Reading

Two Lifeline Providers Agree to Pay $1M to Resolve FCC Investigation

Sat, 02 Mar 2013 15:02:54 GMT

On Feb. 26, the Federal Communications Commission (“FCC”) announced that two wireless Lifeline providers have agreed to payments totaling more than $1 million to end an FCC investigation into whether the two companies violated program rules in Oklahoma. In a consent decree, TerraCom, Inc. agreed to reimburse the Lifeline program for over $400,000 after an... Continue Reading

UK Court of Appeal Holds That, Upon Notice, Google May Be Liable For Defamatory User-Generated Content on Blogging Platform Operated by Google

Wed, 20 Feb 2013 00:00:00 GMT

Unsettled Settlements(?): The Effect of an Invalidated Recess Appointment on the CFPB Director’s Authority to Settle Proceedings

Wed, 13 Mar 2013 11:20:34 GMT

The constitutionality of President Obama’s recess appointment of Richard Cordray as Director of the Consumer Financial Protection Bureau (“CFPB”) is being challenged in a lawsuit filed in the U.S. District Court for the District of Columbia this past June. As we wrote on January 28, 2013, the D.C. Circuit’s decision in Noel Canning v. NLRB,... Continue Reading

Update: Georgia Commission Proposes Alterations to $5 Minimum Rate Rule

Fri, 22 Feb 2013 21:46:14 GMT

On February 19, 2013, the Georgia PSC initiated a new Notice of Proposed Rulemaking (NOPR) to propose changes to the $5 minimum monthly Lifeline rate requirement it adopted on January 16 but which still has not taken effect. As reported then, the $5 minimum rate rule was adopted in a sharply divided 3-2 vote and... Continue Reading

Valuation of Emerging Technology Companies: What You Need To Know

Thu, 16 May 2013 00:00:00 GMT

Are valuations art or science? Why aren’t all valuations the same? How much is common stock worth relative to preferred stock? The answers to these and many other pressing questions will be answered when Greg Endicott, Managing Director of Strategic Value Group, LLC, brings his 20 years of experience and knowledge to Davis, Wright, Tremaine ...

Visa Revises Rules to Permit Discounts on Proprietary, Co-Brand Cards to Foster Its Partnership with Chase

Tue, 26 Mar 2013 14:13:50 GMT

We understand that Visa recently revised its rules to permit US issuers and merchants to offer immediate discounts at the point of sale to encourage and reward the use of different types of Visa cards. Visa’s prior rule barred such point-of-sale differentiation among Visa cards. While the rule change could have a broad impact, we... Continue Reading

Waive the Red Flag – SEC and CFTC Issue Identity Theft Red Flag Rules

Fri, 26 Apr 2013 17:31:36 GMT

On April 10, the Securities and Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”) approved a final rule requiring broker-dealers, registered investment companies, investment advisors, and other “financial institutions” and “creditors” regulated by the SEC or CFTC to set up programs to flag and deter identity theft. The new SEC and CFTC rules are... Continue Reading

Wall Street Journal Reports on Lifeline Re-certification Efforts

Sat, 23 Feb 2013 18:23:08 GMT

On February 11, 2013, the Wall Street Journal ran an article with the headline “Millions Improperly Claimed U.S. Phone Subsidies,” asserting that the results of the new annual recertification process revealed a large number of Lifeline subscribers were not able to prove their eligibility to receive support from the program. While the article mentions that... Continue Reading

Washington Post Article Debunks “False Rumors” Surrounding Lifeline Program

Wed, 17 Apr 2013 21:39:06 GMT

An April 10th, 2013 Washington Post article by national political correspondent Karen Tumulty provides an informed and balanced perspective on the controversies swirling around the federal Lifeline program and ongoing Congressional scrutiny of it. Among other things, Tumulty debunks claims that the Obama administration is distributing free cellphones (“Obamaphones”) to welfare recipients, that the program is a recent... Continue Reading

Washington State to Regulate Fund Managers

Tue, 21 May 2013 20:19:48 GMT

This article is appearing simultaneously on The Venture Alley and on Startup Law Blog. Readers may feel free to re-post this content elsewhere as well. The world is changing for venture funds and similar funds in Washington State, and not necessarily for the better. It used to be the case that managers of venture or other private funds ...

WebBank Agreements

Tue, 30 Apr 2013 20:36:53 GMT

An interesting genre of program and receivables-sale agreements involves WebBank. PLA has collected several publicly available examples and now posts them for your review on the “Deals and Technology Resources” page.

What Merchants Need to Know About the Mobile Payments Services Ecosystem: Patent Infringement Disputes

Tue, 21 May 2013 17:51:20 GMT

At LSI’s Merchant Strategies for Mobile Payments Conference in Seattle on May 14, DWT’s Erica Wilson presented on the topic of “What Merchants Need to Know About How the Key Players in the Mobile Payments Services Ecosystem Relate to Each Other.” Her presentation focused on patent infringement disputes, including a discussion on how merchants might become... Continue Reading

What Would Derek Zoolander Say About Crowdfunding?

Tue, 26 Feb 2013 18:42:06 GMT

By Christina Chan & Joe Wallin I don’t want to bring you back to your high school days (aren’t we all glad those days are over?), but remember when you sat down for a test and your teacher said “Remember to read the instructions before starting”? Maybe you even had one of those particularly cruel ...

When Food Production Leads to Prosecution

Thu, 07 Mar 2013 17:19:52 GMT

World's Tallest Hotel Opens Today

Thu, 28 Feb 2013 17:32:27 GMT

While the real estate market may be climbing back to its former position, the world’s tallest hotel opens for business to the public today. Where can one find this Guinness World Record holding hotel? In Dubai, of course. With over 800 rooms in just one of its towers (the second tower will open in late 2014), this hotel has 77 floors and is just shy of the height of the Empire State Building. This soaring hotel is branded under the new and exclusive JW Marriott Marquis brand. Learn more about this towering hotel here.

Young Entrepreneur Social Charity Auction

Sat, 18 May 2013 15:09:57 GMT

Do you want to make a local impact right now? Are you someone interested in encouraging young entrepreneurs and leaders here in Seattle? Or, are you a young leader yourself who is interested in building a better community locally? On June 6th, the Young Entrepreneur Social is hosting a charity auction at the Bellevue Arts ...