Ninth Circuit Upholds Immunity for Telecoms

By J. Bradford Currier and Marty Stern

A three-judge panel of the U.S. Ninth Circuit Court of Appeals has affirmed the dismissal of thirty-three claims against telecom companies that had assisted government agencies with warrantless eavesdropping in connection with a post-9/11 surveillance program. In a 2008 amendment to the Foreign Intelligence Surveillance Act of 1978 (FISA), which was passed partially in response to pending lawsuits challenging the providers’ assistance to the government in connection with the program, telecom companies were provided qualified retroactive immunity for “providing assistance to an element of the intelligence community,” such as the National Security Agency, to obtain information regarding phone and Internet customer communications. The decision in Hepting v. AT&T Corp. follows years of debate regarding the constitutionality of the surveillance program, as well as multiple legal challenges by privacy advocates such as the ACLU.

Writing for a unanimous court, Circuit Judge Margaret McKeown noted that federal agencies regularly rely upon private companies to assist with intelligence gathering and that lawsuits against such companies may make the companies unwilling to cooperate with the government in future operations. The Ninth Circuit panel found that the qualified immunity provided to telecom companies in the 2008 FISA Amendment did not violate separation of powers principles nor the Fifth Amendment’s due process clause and upheld a federal district court’s 2009 decision dismissing the lawsuits.  In a separate decision issued concurrently with Hepting, the Ninth Circuit panel also affirmed the dismissal, on jurisdictional grounds, of a class action lawsuit that claimed that the warrantless surveillance program violated the takings clause of the Fifth Amendment.

While the panel’s decisions represent a major win for telecom companies, the overall legality of the warrantless wiretapping program remains subject to challenge. In Jewell v. NSA, the Ninth Circuit panel allowed a lawsuit to proceed against the National Security Agency and Department of Justice, noting that the plaintiff had alleged “concrete and particularized” evidence of unlawful surveillance. It is unclear at this time whether Supreme Court review of any of the panel’s recent decisions will be sought.

FCC Launches Proceeding to Review AT&T Acquisition of T-Mobile and Answers Questions

Today the FCC announced the opening of a docket and the issuance of a protective order related to AT&T's proposed acquisition of T-Mobile USA. Presentations by interested parties before the FCC will be exempt from the agency's ex parte procedures until the applications seeking FCC approval are filed. When filed, ex parte communications before the FCC must follow the "permit but disclose" ex parte procedures applicable to non-restricted proceedings, although it reserved the right to treat the proceeding as restricted.

In addition, the FCC held a conference call today for the press in which it shed some light about how it will analyze the merger. First, the FCC indicated that it will conduct its spectrum screen analysis on a "market-by-market" (as opposed to nationwide) basis. AT&T had argued that this is the proper framework for analyzing the merger, contending that there are five or more wireless providers operating in 18 of the top 20 U.S. local markets. Some analysts suggest that if evaluated on a nationwide basis, the transaction's approval would face a higher hurdle because it combines two of the four existing nationwide mobile wireless carriers. Second, the FCC declined to give any timeframe for the transaction's review. If the recent Comcast-NBCU merger is any guide, the FCC's review will take at least twelve months. This timeframe would push the likely decision beyond the expiration of Democratic Commissioner Michael J. Copps’s term with the FCC. Unless a new Democratic commissioner is confirmed by then, there will be a 2-2 partisan split at the Commission just as it seeks to adopt a decision under the glare of a presidential election year (which is not to suggest the transaction is inherently partisan, but partisan politics may complicate the agency's consideration). Third, the FCC clarified that it will primarily focus on the transaction's effect on competition today and in the future, whether it serves the FCC's spectrum policy goals and whether it advances the deployment of new technologies and services. Fourth, the FCC said it will coordinate with the U.S. Department of Justice Antitrust Division's parallel review of the transaction, just as it had with the Comcast-NBCU merger. In addition to review by the FCC and DOJ, the Senate Judiciary Committee will hold hearings next month on the acquisition’s potential impact on the mobile wireless telecom market.