Ding Dong, TCCWNA Class Actions Are Dead.

Today, the New Jersey Supreme Court issued a much-anticipated decision construing New Jersey’s Truth-in-Consumer Contract, Warranty, and Notice Act (“TCCWNA”). The decision affirmed that one who has not suffered actual harm from an allegedly unlawful provision in a contract or notice is not “aggrieved” and therefore cannot sue under the TCCWNA.  Importantly, the Court held that the harm need not necessarily be monetary, but it does have to exist.  This unanimous decision should bring an end to the recent wave of speculative class action lawsuits asserting TCCWNA claims based, for example, on standard provisions in online Terms of Service.

The TCCWNA, as discussed in prior posts here and here, imposes a steep $100-per-violation penalty whenever a “contract” or “notice” contains a term that violates “clearly established” New Jersey or federal law.  If a contract or notice says that some of its terms may not apply in “some states,” without specifically identifying provisions that are unlawful and thus inapplicable in New Jersey, the same $100 penalty attaches.  In a landmark decision last October, the New Jersey Supreme Court curtailed the circumstances in which TCCWNA claims can be pursued on behalf of a class by holding that the statute’s requirement that a consumer must be “aggrieved” requires proof that every putative class member at least was “presented with” the offending notice (in that case a restaurant menu).  The court also put real teeth in the requirement that the “right” a notice supposedly violates must be “clearly established.”

The October decision did not address other important TCCWNA issues, including whether one can be an “aggrieved consumer” without having suffered any actual harm. Just after oral argument in the October-decided case, however the Supreme Court accepted a certified question from the Third Circuit Court of Appeals as to whether one without damages can sue under the TCCWNA.

In Spade v. Select Comfort Corp., the plaintiffs purchased an allegedly faulty adjustable bed and received a refund after the defendant could not fix it.  The plaintiffs nevertheless sued the seller under the TCCWNA, contending that its contract failed to conform to New Jersey regulations for selling household furniture regarding delivery timing.  A district judge dismissed those claims, finding the consumers were not “aggrieved” because they received their refund and because their claim against the seller had nothing to do with delivery timing.

In Wenger v. Bob’s Discount Furniture LLC, the plaintiffs ordered goods from the defendant and received them without complaint, but still sued under the TCCWNA based on allegedly unlawful aspects of the customer agreement, including font size, the company’s refund policy, and several of the contract’s other provisions.  The same district judge dismissed those claims, too, on essentially the same basis, and both cases found their way to the Third Circuit.

On November 23, 2016, the Third Circuit asked the New Jersey Supreme Court to decide whether (1) a consumer who receives a non-conforming contract, but who has not suffered any adverse consequences, is “aggrieved” and therefore can sue under the TCCWNA; and (2) a contract provision that violates the state’s Furniture Delivery Regulations satisfies the “clearly established right” provision of the TCCWNA. That is what led to today’s decision.

The Supreme Court answered the first question by holding that contracts containing provisions at odds with regulations do violate the TCCWNA.  That aspect of today’s ruling cannot be ignored.  Among other things, it means that the New Jersey Attorney General’s Office absolutely can pursue businesses for TCCWNA violations if they include such unlawful provisions.

The Court very clearly and strongly held, however, that consumers cannot sue unless they are “aggrieved.” The plaintiffs tried to define “aggrieved” to mean anyone who is offered or enters into a contract containing an offending term, but the Court held that such an expansive interpretation would effectively write the word “aggrieved” out of the statute.  The term “aggrieved consumer,” the Court held, must “denote[] a consumer who has suffered some form of harm as a result of the defendant’s conduct.”

Although there is much for the business community to celebrate in today’s decision, attention must be paid to the last section of the Court’s opinion, beginning with “[w]e do not, however, view [cognizable] harm to be limited to injury compensable by monetary damages.” TCCWNA, the Court held, “contemplates that a consumer may be entitled to a remedy notwithstanding the absence of proof of monetary damages.”  This might include, for example, someone who received a late delivery and was dissuaded from seeking a refund because an unlawful provision told her she could not do so.  Allegations like this would seem to be highly individualized, however, and therefore not proper subjects for class actions.

Wenger and Spade now return to the Third Circuit, which presumably will uphold the district court’s dismissals.  A cascade of dismissals of other suits then should follow.

Data Breach Notification Law Roundup

Just when you think you have it all under control, the data breach notification law landscape changes – again. Over the past few weeks, several data breach notification statutes were updated, including an effective date for Canada’s mandatory breach notification obligations, as well as the adoption of legislation in the two holdout states (Alabama and South Dakota). Here is the latest:

  • Canada: On March 26, the Governor General in Council, on recommendation of the Minister of Industry, set November 1, 2018, as the effective date for the mandatory data breach notification obligations in the Digital Privacy Act 2015, which amended the Personal Information Protection and Electronic Documents Act (PIPEDA). Beginning November 1, any organization must report to the Privacy Commissioner if it has a reasonable belief that a breach of information under its control creates a real risk of “significant harm” to Canadian residents, as well as notify affected individuals. The term “significant harm” includes bodily harm; humiliation; damage to reputation or relationships; loss of employment, business, or professional opportunities; financial loss; identity theft; negative effects on the credit record; and damage to or loss of property. The notice to affected individuals must contain sufficient information to allow the individual to understand the significance of the breach and to take any steps to mitigate or reduce the risk of any resulting harm.
  • Alabama: On May 1, 2018, the Alabama Data Breach Notification Act will take effect, requiring that companies provide notice of the unauthorized acquisition of electronic data containing sensitive personally identifiable information that is reasonably likely to cause substantial harm. The term “sensitive personally identifiable information” includes an Alabama resident’s first name or first initial and last name in combination with Social Security or tax identification number; driver’s license or other unique government-issued identification number; financial account number in combination with the required security code, access code, password, expiration date, or PIN; medical and health insurance information; or online account credentials. The Act sets a 45-day time limit for consumer and Attorney General (if more than 1,000 Alabama residents are affected) notice. The consumer notice must contain (1) the estimated date(s) of the breach; (2) a description of the affected information; (3) a general description of the remedial actions taken; (4) a general description of the steps consumers can take to protect themselves from identity theft; and (5) the company’s contact information. The Attorney General notice must contain (1) a synopsis of the event surrounding the breach at the time notice is provided; (2) the approximate number of affected Alabama residents; (3) any free services offered to affected individuals, and instructions on how to use those services; and (4) the name, address, telephone number, and email address of the company’s point person for the breach. A violation of the Act will constitute an unlawful trade practice under the Alabama Deceptive Trade Practices Act, subject to a civil penalty of up to $5,000 per day.
  • South Dakota: On March 21, South Dakota enacted S.B. 62. Effective July 1, 2018, the statute will require that companies provide notice of the unauthorized acquisition of unencrypted computerized data (or encrypted computerized data and the encryption key) that materially compromises the security, confidentiality, or integrity of personal or protected information. The statute (1) contains expanded definitions of personal and protected information, which include health information, an employer-assigned ID number in combination with the required security code, access code, password, or biometric data, and online account credentials; and (2) sets a 60-day time limit for consumer notice, unless legitimate law enforcement needs require a longer timer period. Attorney General notice is required if the number of affected South Dakota residents exceeds 250. Violators are liable for a civil penalty of up to $10,000 per day per violation.
  • Oregon: On March 16, Oregon enacted amendments to its data breach notification law, which take effect June 2, 2018. The amendments clarify that personal information includes an Oregon resident’s first name or first initial and last name in combination with any information or combination of information that would permit access to her financial account, and require consumer and Attorney General (if the number of affected residents exceeds 250) notice within 45 days of discovery of a breach. Additionally, if a company provides free credit monitoring or identity theft prevention and mitigation services, it may not require that consumers provide a credit or debit card number (or any fee) to take advantage of those free services. Likely prompted by the Experian data breach, the amendments also prohibit consumer reporting agencies from charging a fee for a consumer to place or lift a security freeze. Previously, the statute capped such fees at $10.
  • Arizona: On April 5, the Arizona Governor received H.B. 2154, which if enacted, would (1) expand the definition of personal information to include a private key unique to an individual and used to authenticate or sign an electronic record, medical and health insurance information, passport and taxpayer identification number, unique biometric data, and online account credentials; and (2) require notification to affected consumers, as well as the Attorney General and the three largest credit reporting agencies if more than 1,000 Arizona residents are affected, within 45 days. Such notices would need to include the approximate date of the breach; a brief description of the affected personal information; the toll-free numbers for the three largest CRAs; and the toll-free number, address, and website address for the FTC. Importantly, these amendments would also create notice provisions specific to online account credentials and clarify that notice should not be made to the affected account, and should prompt the individual to (1) immediately change her password or security question and answer, and (2) take appropriate steps to protect the affected account and all other online accounts with the affected account credentials. If Arizona adopts these amendments, it will become the twelfth state to require notice in the event of a breach of online account credentials – joining California, Delaware, Florida, Illinois, Maryland, Nebraska, Nevada, Rhode Island, and Wyoming, and most recently, Alabama and South Dakota.

These developments demonstrate that data breach notification statutes are evolving, often in response to high-profile data breaches and/or concerns about a specific industry or a specific type of data – such as online account credentials. We expect U.S. states to continue to update these laws, and in particular, to (1) expand the definition of personal information to include medical and health insurance information, biometric data, and online account credentials; (2) require notice to consumers and/or regulators within a specific time period; (3) impose data security requirements; and (4) address concerns with specific industries, such as credit reporting agencies. Stay tuned for more updates!

No SpielBurgers for you! Steven Spielberg Shuts Down Unauthorized Use of His Name

Last week, Carl’s Jr. announced that in honor of Steven Spielberg’s new movie, Ready Player One, they would change the name of their Charbroiled Sliders to “SpielBurgers.” They tweeted: “@StevenSpielberg hasn’t signed off yet, but we’re pretty sure he’ll be down with it.”

In fact, Spielberg was not down with it. He posted a video on Twitter politely declining the honor: “It’s recently come to my attention that Carl’s Jr. wants to rename their Charbroiled Sliders ‘SpielBurgers.’ And they’re pretty good, but I’m passing. Cease and desist. You can’t do it. Sorry, guys.”

Carl’s Jr. took the rejection well, focusing on the positive: “OMG Spielberg likes our Charbroiled Sliders!” Although this was probably a successful campaign for the company, it could have easily turned out worse. As we’ve noted before, some celebrities respond to the unauthorized use of their names less politely. For example, when a clothing company played on Don Henley’s name and encouraged people to “Don a Henley,” the famous musician filed a lawsuit against them.

Some celebrities are willing to play along with these stunts. For example, Mark Hamill tweeted that he was “completely open to the idea of “HAMILLBURGERS” #NoShameNoGain.” But, if you guess wrong, gambling on whether a celebrity is going to be OK with your use of their name can be very costly.

For a more in-depth analysis of these issues, check out Part IPart II, and Part III of a series on Right of Publicity claims on Drye Wit.

CPSC to Hear About the Safety Consequences If a Smart Device Isn’t So Smart

Manufacture, import, or sell a connected device?  In addition to the potential hazards associated with the physical performance of the product, you also need to consider the potential hazards associated with the product’s connectivity.  The Consumer Product Safety Commission (“CPSC”) is considering the Internet of Things and will hold a public hearing on May 16 for interested stakeholders to discuss the potential safety issues with connected products and the CPSC’s role in addressing these issues, along with industry best practices and current standards development.  Privacy and personal data security issues in the IoT environment do not fall under the CPSC’s jurisdiction, but the agency has the authority to cover consumer hazards resulting from IoT products, which could include fire, burn, shock, tripping or falling, laceration, contusion, and chemical exposure.  

The CPSC has identified two product safety challenges associated with IoT products: (1) preventing or eliminating hazardous conditions designed into products intentionally or without sufficient consideration; and (2) preventing and addressing incidents of hazardization.  While the former falls into the CPSC’s wheelhouse of preventing and correcting consumer product issues, the latter is a non-traditional area of product safety activity and could pose some challenges with the high rate of growth of connected products.   The CPSC defines hazardization as “the situation created when a product that was safe when obtained by a consumer, but which, when connected to a network, becomes hazardous through malicious, incorrect, or careless changes to operational code.”  Examples include a connected cooktop with a software glitch that ignites without the consumer’s knowledge and starts a fire or an integrated home security system that fails to download a software update and the default condition is to deactivate the system, disabling the smoke alarms without the consumer’s knowledge. Continue Reading

Seller Beware When Using Third-Party Services to Manage Returns

The Wall Street Journal recently published an article discussing a growing practice among retailers who use third-party services to identify fraudulent returns. These services will inform retailers when they think a return is fraudulent, and some retailers will reject returns based on this information, notwithstanding what is in their return policies. The article presents an example of consumer who was surprised when a retailer rejected his return and then referred him to the third-party service.

Although retailers generally have broad discretion about how to structure their return policies, there are some legal boundaries. For example, some states have specific requirements about what must be in a return policy and how it must be disclosed. More broadly, federal and state consumer protection laws generally require that retailers clearly disclose material terms prior to a purchase. This arguably includes terms of a return policy, including any exceptions under that policy.

Third-party services that help detect return fraud can provide significant benefits for retailers. (According to the article, less fraud can also benefit consumers because retailers can offer more generous policies.) But retailers should use care when relying on these services. If a customer complies with a retailer’s return policy, and the retailer rejects the return based on information from a third-party, the retailer is likely to face complaints. Simply pointing a finger at the third-party is unlikely to help.

One key question in any consumer complaint – or worse, AG investigation or law suit – will be whether the retailer acted in accordance with its policies and whether those policies were adequately disclosed. Articles such as the one in the Wall Street Journal often serve as food for thought for class action attorneys, so if you are using (or thinking about using) a third-party service to identify fraudulent returns, now might be a good time to take a look at your policy.

When Monsters Exaggerate

The Grim Reaper, a mummy, a mad scientist, and a werewolf are riding together on a train after work. No, that’s not the start of a joke, but it is the start of a funny commercial for Spectrum TV. The four characters talk about their weekend plans, as a light rain pelts the train’s windows. When the Grim Reaper laments that his kids are upset because the “satellite dish went out in the rain . . . again,” the mummy asks: “How can they sell something that doesn’t always work in the rain?” The mad scientist observes: “It’s gonna rain eventually, right?” The commercial ends with the following words on the screen: “TV that cuts out in the rain is evil. Spectrum is Reliable.” Then: “Satellite TV Bad. Spectrum Good.”

DirecTV challenged the commercial before the NAD, arguing that it falsely disparaged satellite TV as being highly unreliable in rainy weather. In its defense, Spectrum provided a survey that asked satellite customers about their TV service and experience with weather-related outages. Spectrum argued that the survey demonstrated that “rain fade” is not a rare occurrence for satellite TV subscribers, that it occurs often enough to be a significant issue with satellite service, and that it is a source of frustration for subscribers, if they experience an outage.

The companies argued about how consumers would interpret the commercial. Spectrum argued that the commercial conveyed a narrow message that satellite TV doesn’t always work in the rain, and that outages can frustrate customers, two things that were proven by the survey. DirecTV, however, argued that consumers were likely interpret the commercial to more broadly suggest that satellite TV is highly unreliable, and that outages can occur with even light rain. The NAD generally sided with DirecTV, finding that statements like the “satellite dish went out in the rain . . . again” combined with phrases like “Satellite TV Bad” could convey a broader message about the unreliability of satellite TV.

The NAD determined that although the evidence submitted by Spectrum would support claims that occasional outages due to rain can be a problem, the evidence didn’t support the broader implied claims that satellite TV service is highly unreliable, in general, and that it doesn’t work in bad weather. Although the NAD “has also long recognized that humor can be an effective and creative way for advertisers to highlight the differences between products,” it cautioned that “humor and hyperbole do not relieve an advertiser of its obligation to support messages that their advertisements might reasonably convey – especially when the advertising disparages a competitor’s product.”

The case illustrates at least three key points. First, although we often vilify them, it’s important to remember that monsters can have the same types of problems as the rest of us. Second, advertisers are responsible for all reasonable interpretations of their claims, even if they didn’t intend to communicate some of them. And third, advertisers need to ensure that their claims are closely tailored to their substantiation. Even though a competitor’s product may have a problem or your product may perform better than theirs, you still need to make sure that you don’t inadvertently exaggerate the extent of the problem or the gap in performance.

Embedding Tweets May Be Copyright Infringement

Most companies understand they should obtain a license before using a photograph in an advertising campaign or on printed materials.  And yet companies may not think twice about embedding images from a tweet or social media post into the company’s own social media feed or website. But embedder beware.  A federal judge in the U.S. District Court for the Southern District of New York recently rejected and limited the application of the so-called “Server Test”.

In jurisdictions that have adopted the Server Test, a website publisher can only be liable for direct infringement when a copyrighted image is hosted on its own server as opposed to being embedded or linked from a third-party server. On February 15, 2018, the court in Goldman v. Breitbart News Network, LLC, et al., U.S. District Court for the Southern District of New York, No. 17-cv-3144, found that embedding a tweet of a copyrighted image can be considered copyright infringement, regardless of where the image is hosted.

The Copyright Act grants copyright owners several exclusive rights to control the distribution and use of copyrighted works, including the right to make copies of the work, the right to distribute those copies to the public, and the right to publicly display the copyrighted work. In the Goldman case, the Court held that embedding a tweet of a copyrighted image can violate the copyright owner’s exclusive display right.

See our advisory for more details.

Support for FTC Jurisdiction Over Broadband: Ninth Circuit En Banc Rules Common Carrier Exemption is “Activity,” and not “Status-based,” Reversing Earlier AT&T Victory

The Republican-led FCC’s effort to get out of the business of regulating broadband providers’ consumer practices took a step forward on Monday.  In an appeal that has been proceeding in parallel with the FCC’s “Restoring Internet Freedom” reclassification proceeding, the U.S. Court of Appeals for the Ninth Circuit issued an opinion giving the Federal Trade Commission (FTC) broad authority over practices not classified by the FCC as telecommunications services.  Specifically, the Ninth Circuit, sitting en banc, issued its long-awaited opinion in Federal Trade Commission v. AT&T Mobility, holding that the “common carrier exemption” in Section 5 of the FTC Act is “activity based,” exempting only common carrier activities of common carriers (i.e., the offering of telecommunications services), and not all activities of companies that provide common carrier services (i.e., rejecting a “status-based” exemption).  The case will now be remanded to the district court that originally heard the case.  Coupled with the FCC’s reclassification of Broadband Internet Access Services (BIAS) in the net neutrality/restoring internet freedom proceeding, the opinion repositions the FTC as top cop on the Open Internet and broadband privacy beats.

Background

As we discussed in several earlier blog posts, this case stems from a complaint that the FTC filed against AT&T Mobility in the Northern District of California in October 2014 alleging that AT&T deceived customers by throttling their unlimited data plans without adequate disclosures.  AT&T moved to dismiss the case on the grounds that it was exempt under Section 5, based on its status as a common carrier, but the district court denied the motion, finding that the common carrier exemption was activity-based, and AT&T was not acting as a common carrier when it offered mobile broadband service, which, at the time the FCC classified as a non-common-carrier “information service.”  AT&T appealed and a three-judge panel of the Ninth Circuit reversed the district court, holding that the common carrier exemption was “status-based,” and the FTC lacked jurisdiction to bring the claim.  As we noted then, the three-judge panel’s decision was the first recent case to address the “status-based” interpretation of the common carrier exemption, and the decision – if it stood – could re-shape the jurisdictional boundaries between the FCC’s and the FTC’s regulation of entities in the communications industry.

The En Banc Court’s Analysis

The FTC appealed the case to an en banc panel of the Ninth Circuit, which issued its opinion this week.  The court’s decision relied on the text and history of the statute, case law, and significant deference to the interpretations of the FTC and FCC, which both view the common carrier exemption as activity-based rather than status-based.

The Court first analyzed the history of Section 5 and the common carrier exemption.  It found that the Congress intended the exemption to be activity based and rejected textual arguments advanced by AT&T that other statutory provisions—including Section 6 of the FTC Act and the Packers and Stockyard Exception—demonstrated that the common carrier exemption was status based.  The Court gave significant weight to the understanding of common carriers in 1914, when the FTC Act was first passed, and legislative statements made during consideration of that Act.

The Court then addressed case law that an entity can be a common carrier for some activities but not for others.  The Court found this case law to support an activity-based interpretation of the common carrier exemption.  Specifically, the Court found that while Congress has not defined the term “common carrier,” Supreme Court case law leading up to and following the passage of the FTC Act interpreted the term “common carrier” as an activity-based classification, and not as a “unitary status for regulatory purposes.”  The Court found that its approach was consistent with the Ninth Circuit’s longstanding interpretation of the term “common carrier” as activity-based, as well as the interpretations of the Second, Eleventh, and D.C. Circuits.  (AT&T did not contest these cases, but instead argued that the FCC had many legal tools to address non-common carrier activities, including Title I ancillary authority and potential structural separation.)

Notably, the Court also provided significant deference to the views of the FTC and FCC, both of which have recently expressed the view that the FTC could regulate non-common carrier activities of common carriers.  The Court cited the FCC’s amicus brief before the en banc panel and a 2015 Memorandum of Understanding between the two agencies that interpreted the common carrier exemption as activity-based.

Finally, the Court rejected arguments that the FCC’s 2015 Open Internet Order reclassifying mobile broadband as a common carrier service (or the FCC’s 2017 Restoring Internet Freedom Order reversing that classification) retroactively impacted the outcome of the appeal.

Agency Response

After the court issued its opinion, both FTC Acting Chairman Maureen Ohlhausen and FCC Chairman Ajit Pai applauded the ruling.  Chairman Ohlhausen stated that the ruling “ensures that the FTC can and will continue to play its vital role in safeguarding consumer interests including privacy protection, as well as stopping anticompetitive market behavior,” while Chairman Pai stated that the ruling is “a significant win for American consumers” that “reaffirms that the [FTC] will once again be able to police Internet service providers” after the Restoring Internet Freedom Order goes into effect.

Our Take

The Ninth Circuit’s ruling is unsurprising in some senses.  When a court grants en banc review, it often is for the purpose of reversing or at least narrowing the panel’s initial decision.  AT&T also faced fairly strong questioning during the oral argument in September.  Further, the Court’s decision affirms a position that the FTC had taken for many years and that the FCC – as evidenced by the 2015 Memorandum of Understanding – supported.  Thus, the en banc court here effectively affirms current practice.

All of that said, the issue is not settled.  AT&T’s reaction was decidedly muted, and it may still seek Supreme Court review of the question.  This option may be particularly attractive to AT&T because it noted several times during the oral argument that it faced both FTC and FCC enforcement actions against it for allegedly the same activities.  The Ninth Circuit did not mention the FCC enforcement action or the potentially conflicting interpretations of AT&T’s obligations.  It is not clear whether both actions could or would proceed as a result of the decision.

Going forward, once the FCC’s Restoring Internet Freedom Order takes effect, we can expect that the FTC will serve as the top cop for alleged broadband consumer protection violations, including with respect to open Internet- and privacy-related complaints.  And yet, there is still some uncertainty.  The FCC’s Restoring Internet Freedom Order is under appeal.  If the appeals court that ultimately hears the challenges to the Restoring Internet Freedom Order were to reverse the Order, the possibility exists that broadband services would again come under FCC common carrier jurisdiction, thereby exempting the provision of such services from FTC jurisdiction even under an activity-based interpretation of the FTC Act.  Thus, we may not have finality on broadband regulation, despite the Court’s decision this week.

More broadly, we expect that the FTC will continue to push for eliminating the common carrier exemption altogether before the Congress, as it has for many years.  Congressional action to repeal the exemption appears unlikely in the near term.

At least for now, broadband providers should continue to ensure that their privacy and broadband practices are in line with FTC guidelines and judicial interpretations of Section 5, and should comply with remaining FCC Open Internet requirements, such as the transparency rule.

FCC Net Neutrality Repeal Published in Federal Register, Triggering Deadlines for Challengers

On Thursday, February 22, 2018, the Federal Communications Commission (FCC or Commission) published the Restoring Internet Freedom Order (the Order) in the Federal Register.

As we previously discussed, the Order effectively reverses the Commission’s 2015 Open Internet Order, reclassifying broadband Internet access service as a lightly regulated Title I “information service” and eliminating the 2015 Order’s open Internet rules (while retaining a modified version of the transparency requirement).

The Order will not go into effect until after the Office of Management and Budget completes its Paperwork Reduction Act review, which could take several months. However, last Thursday’s publication is significant because it triggers deadlines for challenges to the Order, both in the courts and in Congress.

The Federal Register publication gives litigants ten days to file petitions for review in federal courts of appeals if they would like to be included in a court lottery to determine the venue for consolidating the Order’s challenges. The following petitions have already been filed:

  • New York District Attorney General Eric Schneiderman announced he and 22 other Democratic attorneys general filed a petition for review at the U.S. Court of Appeals for the D.C. Circuit;
  • Public Knowledge, Mozilla, Vimeo, National Hispanic Media Coalition, and New America’s Open Technology Institute each filed petitions for review in the D.C. Circuit;
  • The California Public Utilities Commission and Santa Clara County each filed appeals in the Ninth Circuit;

Several other parties, including the Internet Association (representing Google, Microsoft, and Amazon, among others), INCOMPAS, the Computer & Communications Industry Association (CCIA), and Free Press are expected to file petitions for review in the near term.

Federal Register publication also allows lawmakers to formally introduce a Congressional Review Act (CRA) resolution of disapproval, which would reverse the Order and prevent the Commission from subsequently introducing a substantially similar Order. While CRA resolutions are a powerful tool in the hands of the majority – as we saw with the rollback of the Broadband Privacy Order earlier this year – as the minority party, the Democrats are at a significant disadvantage. Senator Ed Markey, D-MA, and House Communications Subcommittee ranking member Mike Doyle, D-PA, have led the Democrat’s effort to draft a CRA resolution to nullify the Order. At the time of this blog post, the CRA resolution had 50 Senator co-sponsors, including all 49 Democratic senators and Senator Susan Collins, R-ME.  President Trump is not expected to support the CRA resolution, even if the measure passed both chambers of Congress.

In addition to activities in federal court and in Congress, 26 states are considering net neutrality legislation, and five state governors have issued executive orders regarding net neutrality following the Commissioners’ December 2017 vote.

We will follow up this blog post with a more comprehensive review of the Restoring Internet Freedom Order soon. In the meantime, contact any of the authors of this blog post for more information on the proceeding.

CPSC Votes to Sue Britax Over B.O.B. Strollers

Last Friday, the CPSC voted to sue Britax Child Safety, Inc. to force the company to recall various models of single and double B.O.B. jogging strollers. The one-count administrative complaint alleges that the strollers present a substantial product hazard under Section 15(a)(2) of the Consumer Product Safety Act because they contain a product defect that presents a substantial risk of injury to the public.

The CPSC claims that the three-wheel strollers’ quick release mechanism can fail to secure the front wheel to the fork, allowing that front wheel to detach during use. Furthermore, due to the design of the stroller, consumers are allegedly likely to believe that the wheel is secured when it is not. The CPSC states that it has received over 200 reports of incidents since January 2012 – 97 of which resulted in injuries, some severe, to 50 children and 47 adults. In a press release on the B.O.B. website, Britax counters that the strollers are safe when used as instructed and do not contain a defect. The company points out that the QR mechanism is “widely-used” in bicycles and strollers, and front wheel detachments only occur when wheels are installed improperly – and contrary to available written and video instructions.

The complaint requests a finding that the strollers present a “substantial product hazard” under the CPSA and an order Britax that implement a corrective action plan that includes initiating a stop-sale, notifying consumers and the public of the recall, and providing a remedy. The Commissioners voted to approve the complaint along party lines, with Acting Chairman Ann Marie Buerkle opposing the filing. As we have previously reported, the Commission’s priorities could shift if she and Republican nominee Dana Baiocco are confirmed.

Under the CPSA, manufacturers, distributors, and retailers have an obligation to report to the CPSC as soon as they obtain information that reasonably supports the conclusion that a consumer product contains a defect that could create a substantial product hazard, or creates an unreasonable risk of serious injury or death. The CPSC takes this reporting obligation very seriously, and staff do not hesitate to reach out to companies after receiving a number of consumer complaints related to a single consumer product (or set of products).

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