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FCC too harsh on 'fleeting expletives,' court rules
Lawyer Blog News | 2007/06/05 14:42

Kevin Martin, chairman of the FCC, said the agency was now considering whether to seek an appeal before all the judges of the appeals court or to take the matter directly to the Supreme Court. The decision, by a divided panel of the 2nd U.S. Circuit Court of Appeals in New York, was a sharp rebuke for the FCC and for the Bush administration. For the four television networks that filed the lawsuit, Fox, CBS, NBC and ABC, it was a major victory in a legal and cultural battle that they are waging with the commission and its supporters.

Under Bush, the FCC has expanded its indecency rules, taking a much harder line on obscenities uttered on broadcast television and radio.

While the court sent the case back to the commission to rewrite its indecency policy, it said that it was "doubtful" that the agency would be able to "adequately respond to the constitutional and statutory challenges raised by the networks."

The networks hailed the decision.

Martin, the chairman of the commission, attacked the court's reasoning.

He said that if the agency was unable to prohibit some vulgarities during prime time, "Hollywood will be able to say anything they want, whenever they want."

Beginning with the FCC's indecency finding in a case against NBC for an obscenity uttered by the U2 singer Bono during the Golden Globes awards ceremony in 2003, Bush's Republican and Democratic appointees to the commission have imposed a tougher policy by punishing any station that broadcasts a fleeting expletive.

That includes profanities blurted out on live shows like the Golden Globes or scripted shows like "NYPD Blue," which was cited in the case.

Reversing decades of more lenient policy, the commission had found that the mere utterance of certain profane words implied that sexual or excretory acts were carried out and therefore violated the indecency rules.

But the court said vulgar words were just as often used out of frustration or excitement, and not to convey any broader obscene meaning.

"In recent times even the top leaders of our government have used variants of these expletives in a manner that no reasonable person would believe referenced sexual or excretory organs or activities," the court said

Adopting an argument made by lawyers for NBC, the court then cited examples in which Bush and Cheney had used the same language that would be penalized under the policy. Bush was caught on videotape last July using a common vulgarity that the commission finds objectionable in a conversation with Prime Minister Tony Blair of Britain.

Three years ago, Cheney was widely reported to have muttered an angry profane version of "get lost" to Sen. Patrick Leahy on the floor of the U.S. Senate.



Three plead guilty in Chinese spying case
Court Feed News | 2007/06/05 13:45

June 5 Three relatives of a Chinese-American engineer convicted of conspiring to pass U.S. secrets to China have pleaded guilty in California to similar charges. Tai Mak, brother of convicted engineer Chi Mak, pleaded guilty in a Santa Ana, Calif., U.S. District Court to violating export-control laws, The Los Angeles Times reported Tuesday.

Tai Mak's wife, Fuk Heung Li; and son, Billy Yui Mak, pleaded guilty to aiding and abetting the violation of the export-control laws.

Chi Mak was convicted May 10 of acting as an unregistered agent for China, giving false statements to the FBI, conspiracy to violate export-control laws and attempting to violate export-control laws. He was accused of attempting to pass information on U.S. naval technology to China, the newspaper report said. Prosecutors said he put the information on two encrypted disks and gave them to his brother to transport to China.

Chi Mak's wife, Rebecca Laiwah Chiu, is scheduled to go on trial Tuesday, the Times said.



High Court Ruling Could Be Boon for Retailers
Headline News | 2007/06/05 13:43

A Supreme Court ruling handed down Monday could be good news for more than 100 major retailers targeted by class-action lawsuits alleging that the companies failed to comply with a law designed to protect consumers from identity theft. The retailers -- including Rite Aid, KB Toys, Regal Cinemas and In-N-Out Burger -- have been sued for allegedly violating an amendment to the Fair Credit Reporting Act (FCRA) that requires companies to remove full credit card numbers and expiration dates from printed customer receipts.

The new protections, added in the Fair and Accurate Transactions Act, went into effect in early December 2006. The provisions were meant to protect shoppers from identity thieves, who have been known to dig through trash dumps to steal receipts in search of credit-card information.

Very shortly after the law took effect, class-action lawyers pounced, charging that dozens of retailers had violated the FCRA by continuing to print receipts without redacting all or some of the data . Citing what they called questionable wording in the statute, attorneys for the retailers claimed their clients were operating under the position that compliance with the law meant redacting either the credit card number or the expiration date, but not necessarily both. (Judge for yourself - the statute reads: "No person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt... .")

Companies found guilty of failing to observe this portion of the FCRA can be fined between $100 to $1,000 per violation, a potentially huge sum for retailers that print tens of thousands of receipts per day.

The plaintiffs filed most of their cases in California, where the Ninth Circuit Court of Appeals had issued a pair of decisions that signaled it was apt to be more lenient in deciding which actions (or inactions) constitute a "willful" violation of the FCRA. The Ninth Circuit sent that signal in Safeco Insurance v. Burr and Geico General Insurance v. Edo, saying the insurers violated the FCRA when they failed to tell customers anytime that low credit scores affected the rates they paid. The AP story on Monday's decision says that consumer groups point to the notification requirement in FCRA as "the cornerstone to cleansing credit reports of inaccurate information."

The Ninth Circuit held that defendants could be found liable for a willful violation of the FCRA absent proof that they either actually knew that they would be violating the statute or acted in reckless disregard of whether they were violating it.

The two insurance cases were appealed to the Supreme Court, which on Monday reversed the Ninth Circuit's opinions, sending them back to the lower courts for further deliberation. The High Court's majority opinion, written by Justice David Souter, effectively confined the Ninth Circuit's open-ended definition of what kinds of actions constitute reckless disregard. In order for a company to be found liable for a reckless violation, Souter wrote, its conduct must involve an unjustifiably high risk of harm that is either known to a company or is so obvious that it should have been known.

Charles A. Patrizia, a partner with the Washington office of law firm Paul Hastings, which is representing a number of the retailers targeted in the class-action suits,
said the high court's ruling was a positive development for the defendants, but he doubted that the any of the plaintiffs would go so far as to drop their cases as a result of today's decision.

"So now the question becomes, even with the expiration date printed on the receipt and only part of the credit card number, is there an unjustifiably high risk that someone is going to figure out a way to guess those last missing digits and use it? That risk seems pretty low."

Mark Rasch, a former Justice Department prosecutor who now serves as a managing director at FTI Consulting, called Monday's decision good news for the retailers in the class-action cases, but said the jury was still out for its impact on consumer rights.

"While this decision doesn't mean companies can avoid liability simply by avoiding knowing about legal requirements, it means companies are free to be wrong, as long as they're not grossly wrong," Rasch said.



Supreme Court rules in favor of Safeco, Geico
Lawyer Blog News | 2007/06/04 18:36

The U.S. Supreme Court limited the rights of consumers under a federal credit-reporting law in a victory for insurers Safeco Corp. and Geico Corp. and other financial-services companies. The justices today said the Fair Credit Reporting Act doesn't require insurers to notify every consumer who is offered something short of the best rate when seeking a quote or applying for a policy.

"Notices as common as these would take on the character of formalities, and formalities tend to be ignored,'' Justice David Souter wrote for seven of the court's nine justices.

The court also unanimously limited the applicability of a provision that permits damage awards even when consumers don't suffer any injury. Although the justices didn't go as far as the insurance industry had sought, they said Safeco wasn't subject to the provision because it didn't recklessly violate the law.

The insurance industry had said it faced the prospect of billions of dollars in damage claims had it lost the high court case. Some 2,600 lawsuits alleging violations of the fair-credit law are pending in federal courts.

The "most critical aspects'' of the ruling favored the industry, said David F. Snyder, a lawyer with the American Insurance Association. "The Supreme Court balanced both consumer needs and business needs in a common-sense decision.''



Watkins Ludlam Receives National Recognition
Law Firm News | 2007/06/04 18:35



Watkins Ludlam Winter & Stennis has been recognized by American Lawyer Media (ALM) as a "Go-To Law Firm" in the area of Litigation. The firm will be recognized as a Go-To Law Firm in a national reference guide which is being released at the end of June 2007. Nominees are chosen from an ALM national survey of General Counsel from the Leading Financial Services Companies coupled with in-depth research & analysis of various public filings and resources. After a lengthy & rigorous process only the strongest firms made it to the top of the list, hence being named a Go-To Law Firm.

Watkins Ludlam Winter & Stennis, which has more than 70 lawyers, is headquartered in Jackson and has offices in Gulfport and Olive Branch.

Additional information about Watkins Ludlam and American Lawyer Media can be found at www.watkinsludlam.com



Appeals court rejects Mich. abortion law
Legal Career News | 2007/06/04 17:42

A federal appeals court Monday rejected Michigan's attempt to ban a procedure opponents call partial-birth abortion, ruling the law unconstitutional because it could also prohibit other abortion procedures. A three-judge panel of the 6th U.S. Circuit Court of Appeal said the Michigan Legislature would have been "virtually guaranteed" a favorable result on appeal had it copied an Ohio law that the 6th Circuit already has upheld.

"It instead opted to use statutory language that pushed almost every boundary that the Supreme Court has imposed for these types of laws," the judges said.

Previous attempts by Michigan lawmakers to stop the procedure were struck down by federal courts in 1997 and 2001.

The U.S. Supreme Court in April upheld the federal Partial-Birth Abortion Ban Act, with the majority opinion carefully distinguishing the controversial procedure from a more common abortion method used in the second trimester of pregnancy. The latter was unaffected by the ruling.

The appeals panel affirmed a Detroit district judge's opinion that the 2004 Legal Birth Definition Act in Michigan places an "undue burden" on a woman's right to have an abortion.

Abortion rights groups have said the law - unlike the federal ban and the law in Ohio - overreached and would have banned pre-viable abortions, including the most common method of second-trimester abortion. The appeals court agreed.

"The Michigan statute contains no similar exception or clear definitions that would avoid sweeping up protected abortion procedures within its prohibition," the court wrote.

The Michigan Legislature approved the abortion law in June 2004. Hundreds of thousands of voters signed petitions that allowed the bill to become law with only the approval of the House and Senate - both of which were controlled by Republicans at the time - after Democratic Gov. Jennifer Granholm vetoed it.



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