Call for Comments on California Privacy Rights Act Regulations

The California Privacy Protection Agency has issued an Invitation for Preliminary Comments on Proposed Rulemaking under the California Privacy Rights Act of 2020. Stakeholders are invited to assist the Agency in developing regulations for the CPRA by proposing specific language for new regulations and/or for changes to the existing regulations. Continue reading “Call for Comments on California Privacy Rights Act Regulations”

Illinois Decision Raises Issues Regarding Use of Filed Rate Doctrine on Motions to Dismiss

The ruling.  Commonwealth Edison (ComEd), the retail electric utility for the Chicago area, has been accused of bribing the Illinois Speaker of the House to help pass laws that led to ComEd being able to increase its charges by billions of dollars.  In 2020, a putative class of retail consumers sued ComEd in the Northern District of Illinois, alleging RICO and state-law violations.  As damages, they sought a refund of the “fee increases” that led to them “overpaying for electricity.”  Last week, in Gress v. Commonwealth Edison Co., Nos. 20-cv-4405 et al., 2021 WL 4125085 (N.D. Ill. Sept. 9, 2021), the court dismissed the RICO claim for failure to plead sufficient facts and under the principle of Fletcher v. Peck, 10 U.S. 87 (1810), finding that the RICO claim effectively asked a federal court to nullify the state laws that led to the rate increases based on the state legislators having bad motives, which Fletcher precludes.

Prior to making those rulings, however, the court declined to dismiss the RICO claim under the filed rate doctrine – a century-old rule that shields public utilities from liability on claims they charged excessive rates when the rates charged were those in their filed tariffs.  The court reasoned that the filed rate doctrine is an affirmative defense as to which the defendant must prove each element, and that because the complaint did not expressly state the plaintiffs paid for service under ComEd’s filed tariffs, ComEd could not prove all the elements it needed at the motion-to-dismiss stage.  (For discussion of another recent case involving alleged bribery of legislators to increase public utility rates in Ohio, see here).

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Recent Developments on Cryptocurrency and Fraud in the UK

We are now starting to see a variety of cryptocurrency related frauds appearing before the English Court. Following the decision in AA v Persons Unknown [2019] EWHC 3556 (Comm) (where an insurer was granted a proprietary injunction as part of its strategy to recover a ransomware payment which had been negotiated and paid in Bitcoin) the English Court has dealt with several cases relating to cryptocurrency.

To read the full text of this blog post by Duane Morris attorney Chris Recker, please visit the Duane Morris London Blog.

Preemption of State Broadband Regulation – New York and California Federal Courts Diverge

How a communications service is classified has a critical impact on how (or whether) it can be regulated.  That has been a critical issue with respect to internet access service, where the FCC has vacillated between defining it as a “telecommunications service” (and thus potentially subjecting it to common carrier regulation under Title II of the federal Communications Act) or as an “information service” (thus subjecting it to very limited potential FCC regulation under Title I of that Act).  After classifying broadband internet access service (BIAS) as a “telecommunications service” in 2015 and imposing “net neutrality” requirements in BIAS providers, the FCC changed course in 2018 and removed those rules, finding they were detrimental to broadband investment, innovation, and availability and that BIAS should instead be classified as an “information service.  Many states then considered how to react to the FCC’s 2018 Order.  Some considered new statutes that ultimately did not pass, some directed agencies to look into the topic and report back, some used executive orders to require broadband providers contracting with the state to follow net neutrality principles, and some passed specific statutes.

The two most far-reaching statutes, from California and New York, have been challenged in federal court by industry associations arguing both field preemption and conflict preemption.  The California court denied a preliminary injunction of the law there (SB-822), which reimposed the same net neutrality requirements the FCC removed in 2018.  American Cable Ass’n v. Becerra, No. 18-cv-2684 (E.D. Cal., Feb. 23, 2021) (oral ruling).  That decision is on appeal at the Ninth Circuit, where it has been fully briefed (No. 21-15430).  Meanwhile, last Friday the New York court granted a preliminary injunction against a New York law (referred to as the ABA) that requires BIAS providers to offer a $15 broadband internet service plan to qualifying low-income customers.  New York State Telecomms. Ass’n v. James, No. 21-cv-02389 (E.D.N.Y., June 11, 2021).  That ruling may well be taken up to the Second Circuit.  Although the two states’ laws are different, there is extensive overlap in the arguments in the cases, and it is interesting to compare how differently the two courts addressed them.

Field Preemption.  BIAS is an interstate service, as it provides users with access to all internet endpoints, which could be anywhere in the world.  In both California and New York, the industry associations argued that 47 U.S.C. § 152(a) gives the FCC exclusive jurisdiction to regulate the provision of interstate communications services, and that this exclusive jurisdiction preempts states from regulating in that field.  They also relied on caselaw stating that the FCC has exclusive or plenary authority over interstate communication services, and distinguishing that from the power left to the states over intrastate communications services.  California and New York responded by arguing that Section 152(a) merely discusses FCC authority to regulate interstate services, without clearly excluding the states.  They also contended that the federal Communications Act excludes some interstate communications services, such as information services, from FCC authority, and argued that this means Congress did not give the FCC exclusive power in the field of interstate communications services.

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Facebook Wins Battle of the Canons in Supreme Court Autodialer Case

In a hotly anticipated decision that should have significant impact on litigation under the Telephone Consumer Protection Act of 1991 (TCPA), the Supreme Court held, 9-0, that the TCPA’s definition of an “autodialer” does not include equipment that merely stores telephone numbers to be dialed automatically, unless the equipment does so using a random or sequential number generator.  Facebook, Inc. v. Duguid, No. 19-511 (U.S., April 1, 2021).

Stopping unwanted or harmful telemarketing calls has long been a consumer-protection priority.  Toward that end, the TCPA prohibits certain communications made with an “automatic telephone dialing system,” or “autodialer.”  47 U.S.C. § 227(b)(1).  The TCPA defines “autodialers” as equipment with the capacity “to store and produce telephone numbers to be called, using a random or sequential number generator,” and to dial those numbers.  47 U.S.C. § 227(a)(1).  There was no dispute that the last clause (“using a random or sequential number generator”) qualifies the last verb in the preceding clause (“produce”).  The exam-worthy question before the Court, however, was whether that last clause also qualifies the first verb in the preceding clause, “store.”  Put another way, does the TCPA’s definition of autodialer apply to all equipment that “store[s] … telephone numbers to be called,” even if the equipment does not do so “using a random or sequential number generator?”  (The facts of the case play no real role here, but, for context, Facebook used equipment that stored numbers to be dialed automatically, but did not use a random or sequential number generator, so the question was whether Facebook’s equipment fell with the TCPA definition of autodialer).

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CLECs Challenge FCC’s 2019 Access Stimulation Rules

Briefing is now complete at the D.C. Circuit in the latest appeal involving the FCC’s rules on access stimulation schemes.  Access stimulation (or traffic pumping) refers to a practice in which a local telephone company partners with entities that generate large amounts of terminating long-distance traffic, such as “free” conference calling providers and chat lines.  This allows the local telephone company to generate large revenues from the access charges that long-distance carriers must pay to terminate the calls through the local telephone company.  The revenues are then shared with the conferencing or chat line entities, which allows the services to be “free” to the end users.

In 2011, the FCC declared access stimulation a “wasteful arbitrage scheme” and adopted rules to curb the practice, primarily through requiring companies engaged in traffic pumping to reduce their rates to those of the large, urban carriers.  Connect America Fund, 26 FCC Rcd 17663, ¶¶ 656-201 (2011), aff’d, In re FCC 11-161, 753 F.3d 1015 (10th Cir. 2014).  However, those rules did not reduce the practice as much as hoped.  For instance, some traffic pumpers  adjusted their schemes by including intermediate carriers (tandem and transport providers) in the call flow, which increased the overall charges.

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