Antitrust Law Daily Wrap Up, PRIVACY—Fed. Cl.: Contestant may pursue breach of contract claim over “FTC Robocall Challenge”, (Aug 28, 2014)

By Greg Hammond, J.D.

The United States was unable to evade a contestant’s breach of contract claims over an FTC contest for developing a technological solution to the problem of automated “robocalls,” the U.S. Court of Federal Claims decided. In partially denying the government’s motion to dismiss, the court determined that it had jurisdiction over the contestant’s properly alleged breach of contract claim (Frankel v. U.S., August 27, 2014, Allegra, F.).

Background. Pursuant to the America COMPETES Reauthorization Act of 2010, the FTC created the “FTC Robocall Challenge,” in which participants would invent innovative solutions to block illegal robocalls on landlines and mobile phones. The maker of the “best overall solution” would receive a $50,000 prize. David Frankel participated in the contest, but did not win. After collecting information and investigating the FTC’s conduct during the contest, Frankel filed a protest with the Government Accountability Office (GAO), claiming that the winners did not meet contest rules, and the Commission violated its own rules when picking those winners. The GAO dismissed the protest, and Frankel filed a complaint with the U.S. Court of Federal Claims, asserting claims for breach of contract and injunctive relief. The government moved to dismiss the complaint.

Breach of Contract. In support of his breach of contract claim, Frankel argued that the competition was a unilateral contract, which he accepted when he submitted his entry into the competition. The court agreed, noting that “[t]he offer by one party of specified compensation for the performance of a certain act to any or all persons who may accept and comply with its conditions constitutes a promise by the offeror, and the performance of that act is the consideration for the promise. The result is an enforceable contract.” Because Frankel alleged that the FTC breached the contract by providing the winners of the competition—who did not follow the rules—with the $50,000 cash prize, it concluded that he properly alleged a breach of contract claim. Consequently, the government’s motion to dismiss was denied.

However, the court determined that it lacked jurisdiction over Frankel’s claim for injunctive relief, as the FTC’s contest was not a “procurement” under 28 U.S.C. sec. 1491(b)(1). Consequently, the claim for injunctive relief was dismissed.

Although the winners of the FTC Robocall Challenge were named in 2013, the Commission announced today the winners of a new robocall contest, “Zapping Rachel,” which was held at the DEF CON 22 hacking conference in Las Vegas earlier this month. The winners of the three-phased contest each won $3,133.70.

The case number is 13-546C.

Attorneys: David Frankel, pro se. Meen Geu Oh and Stuart F. Delery (U.S. Department of Justice) for defendant.

Cases: Privacy ConsumerProtection FederalTradeCommissionNews