E-Commerce Law Week, Issue 483

Appeals Court Keeps Wiretapping Suit Alive, While Congress Fights Over Telecom Immunity

Questions about the legality of, and telecom liability for, post-9/11 warrantless surveillance continue to swirl in both the courts and Congress.  The wiretapping was conducted as part of the so-called Terrorist Surveillance Program (TSP), without complying with the Foreign Intelligence Surveillance Act (FISA).  Claiming that surveillance under the TSP was unlawful, civil liberties groups, state utility boards, and others have filed a flurry of law suits against the government and the telecoms that allegedly assisted in implementing the wiretaps.  As we previously reported, these cases have been consolidated in the Northern District of California, which has generally allowed the cases to proceed, albeit with significant restrictions on discovery.  On November 16, the Ninth Circuit delivered a mixed decision in one of the suits against the government, ruling in Al-Haramain Islamic Foundation, Inc. v. Bush that the TSP itself was not a state secret, but that a piece of evidence central to the plaintiffs' case was.  The court also directed the district court to consider whether FISA preempts the state secrets privilege and allows the court to consider, in camera and ex parte, such secret evidence in determining the legality of the surveillance.  The suit is thus still very much alive.  Meanwhile, Congress continues to battle over legislation to amend FISA, including the question of whether to provide retroactive immunity for telecoms that allegedly cooperated with the government in the TSP. 

Oregon Court Dismisses Data Breach Class Action

Another court has ruled that a risk of future harm stemming from a breach of personal information is insufficient to support a negligence claim.  In Gibson v. Providence Health System-Oregon, an Oregon state trial court granted Providence Health's motion to dismiss a putative class action suit for negligence, negligence per se, and unlawful trade practices.  Citing Oregon precedent holding that medical monitoring expenses were insufficient to establish negligence liability absent "actual, present harm," the court found that "the damages prayed for were not compensable under Oregon law" -- apparently because the plaintiffs had not shown any injury other than potential harm to their credit.  The court also found that the suit should be dismissed under a state law that permits class action defendants to avoid liability by promptly taking steps to remedy the alleged wrong.

German Court Mandates iPhone Interoperability

Earlier this month, the Regional Court of Hamburg issued a preliminary injunction requiring T-Mobile to offer Apple's iPhone to German customers without requiring a two-year contract for T-Mobile cellular service.  T-Mobile must also offer an "unlocked" version of the iPhone so that it can be used on any compatible network, not just T-Mobile's.  The injunction was sought by T-Mobile competitor Vodafone.  The ruling was based on a German law that prevents tying the purchase of one product or service to that of another.  Due to a similar French law, the iPhone's exclusive French carrier, Orange, will also offer an unlocked version.  These developments raise issues similar to those raised in Skype's "Carterfone" petition before the U.S. Federal Communications Commission.  That petition asks the FCC to allow users to operate software and devices of their choice on wireless networks, without prior authorization from the network providers.  Though the European developments are unlikely to influence the FCC -- at least not explicitly -- there does appear to be a trend brewing toward cellphone interoperability, with significant ramifications for mobile carriers, cellphone manufacturers, and software companies.  Indeed, Verizon Wireless reportedly is now considering opening its network to the phones or software applications of users' choice.

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