Antitrust Law Daily Wrap Up, CONSUMER PROTECTION—D. Md.: U.S. mobile company required to comply with FTC subpoena, (Aug 5, 2014)

By Jody Coultas, J.D.

The federal district court in Baltimore has required Aegis Mobile, LLC to comply with a subpoena issued by the FTC at the request of The Competition Bureau of Canada (In re Application of the Federal Trade Commission for an Order Pursuant to 28 U.S.C. § 1782 to Obtain Information from Aegis Mobile LLC, August 4, 2014, Garbis, M.). The FTC had previously stayed a petition to quash a civil investigative demand in order to initiate proceedings before the Baltimore court.

The Competition Bureau of Canada filed suit against various Canadian wireless companies for allegedly misrepresenting their premium cellular services. One such company, Canadian Wireless Telecommunications Association (CWTA), contracted with Aegis to collect and analyze the advertising used to promote the Canadian cellular companies’ digital content. In response to The Competition Bureau’s request that the FTC seek documents and testimony from Aegis, the FTC served a subpoena on Aegis, seeking the production of documents relating to CWTA.

After Aegis failed to comply with the subpoena, the FTC was granted a motion to compel compliance. Aegis filed a third party motion to vacate the order on the motion to compel.

The FTC may provide the assistance to foreign law enforcement agencies without requiring that the conduct identified in the request constitute a violation of the laws of the United States. An exemption exists for common carriers subject to the Communications Act.

Aegis’ argument that the FTC had no authority to obtain discovery based on the “common carrier” exemption was dismissed by the court. An entity is subject to the Communications Act only if it is “engaged within the United States” in “interstate and foreign communication by wire or radio [or] ... interstate and foreign transmission of energy by radio, which originates and/or is received within the United States.” Neither Aegis nor any of the Canadian companies were subject to the Communications Act. In addition, the FTC’s authority to assist a foreign agency existed even if the FTC could not address such conduct if it occurred in the United States.

Aegis argued that the FTC lacked authority to subpoena the files because the Canadian proceeding did not involve an activity substantially similar to a practice prohibited by a law administered by the FTC. However, the court held that the deceptive advertising and billing claims were “substantially similar” to practices prohibited by the FTC Act.

Aegis further asserted that complying with the subpoena would impose an undue burden based on costs of privilege claims. The court disagreed, finding that Aegis failed to present a basis to believe that it had any privilege to assert. Aegis made vague and unsupported references to unknown types of privileges that might be available to its customers under Canadian law. The court required immediate production of certain documents and deferred action with regard to the balance of the other documents at issue. After review of materials supplied, the FTC may file a further motion seeking production of additional documents and data.

The case is No. MJG-13-mc-524.

Attorneys: Burke Kapple for the Federal Trade Commission. Richard D. Mirsky (Law Office of Richard D. Mirsky) for Aegis Mobile, LLC.

Companies: Aegis Mobile, LLC

Cases: ConsumerProtection MarylandNews