In re Application of the Federal Trade Commission for an Order Pursuant to 28 U.S.C. 1782

Filing 24

MEMORANDUM AND ORDER WITH CORRECTED CONCLUSION "DENYING" FTC's Motion to compel as therein set forth - Signed by Judge Marvin J. Garbis on 8/4/2014. (sls, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
IN RE APPLICATION OF THE FEDERAL
TRADE COMMISSION FOR AN ORDER
PURSUANT TO 28 U.S.C. § 1782 TO
OBTAIN INFORMATION FROM AEGIS
MOBILLE LLC ON BEHALF OF THE
COMPETITION BUREAU, CANADA, FOR
USE BY FOREIGN JUDICIAL
PROCEEDINGS

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FEDERAL TRADE COMMISSION

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Movant

CASE NO. MJG-13-mc-524

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AEGIS MOBILE, LLC

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Third-Party Defendant
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MEMORANDUM AND ORDER WITH CORRECTED CONCLUSION
The Court has before it Third-Party Aegis Mobile, LLC’s
Motion to Vacate the January 30, 2014 Order on The FTC’s Motion
to Compel [Document 7], a document entitled “Aegis Mobile, LLC’s
(1) Opposition to the FTC’s Motion to Compel Aegis to Respond to
a Subpoena; and (2) Cross-Motion to Quash that Subpoena or,
Alternatively, to Modify that Subpoena and Enter a Protective
Order [Document 11]” that shall be treated as a “Motion to Quash
the Commissioner’s Subpoena,” and the materials submitted
relating thereto.

The Court has held a hearing and has had the

benefit of the arguments of counsel.

I.

BACKGROUND
At times relevant hereto, the Competition Bureau of Canada

(the “Competition Bureau”) requested assistance in a Canadian
civil enforcement proceeding against various Canadian wireless
companies alleged to have deceptively advertised certain premium
cellular services in violation of Canadian law.1
During its investigation of the Canadian cellular
companies, the Competition Bureau found that the Canadian
Wireless Telecommunications Association (“CWTA”)2 had contracted
with Aegis Mobile LLC (“Aegis”), a company based in Columbia,
Maryland, to collect and analyze the advertising used to promote
the Canadian cellular companies’ digital content – this is the
same advertising that the Competition Bureau alleges is false
and misleading.

The Competition Bureau asked the Federal Trade

Commission (“FTC”) to seek documents and testimony from Aegis
regarding its activities on behalf of the Canadian defendants.
On November 1, 2013, the FTC applied [Document 1] for an ex
parte order appointing an FTC attorney as a commissioner of the
Court for purposes of obtaining documents and information upon

1

The Competition Bureau is an independent Canadian law
enforcement agency. The Safe Web Act authorizes the FTC to
assist a foreign law enforcement agency that is investigating,
or engaging in enforcement proceedings against, possible
violations of laws prohibiting fraudulent or deceptive
commercial practices. 15 U.S.C. § 46(j).
2
CWTA is one of the defendants in the Canadian proceeding.

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the request from the Competition Bureau. The Court issued the
Order November 1, 2013 authorizing the commissioner’s subpoena
at issue [Document 2].

Pursuant to the Order, the FTC served a

commissioner’s subpoena on Aegis, seeking the production of
certain documents set forth in “Specifications”3 relating to
CWTA, a customer of Aegis.
On January 28, 2014, since Aegis had not complied with the
subpoena, the FTC filed its Motion to Compel Compliance
[Document 4].

The motion was granted by Order issued January

30, 2014 [Document 5].

On February 4, 2014, Aegis filed Third-

Party Aegis Mobile, LLC’s Motion to Vacate the January 30, 2014
Order on the FTC’s Motion to Compel [Document 7].

By Memorandum

and Order issued February 6, 2014 [Document 10], the Court
provided that:
2.

Aegis may defer production of said
documents in compliance with the
subpoena pending further Order
following consideration of the issues
raised by the instant motion.

3.

Aegis shall assemble, and prepare for
production within two business days
after issuance of an Order directing
production, all items subject to the
subpoena at issue together with any
privilege log relating to items as to
which privilege is claimed.

Memorandum and Order 2 [Document 10].

3

See Appendix, attached hereto.

3

By the instant motions, Aegis seeks to have the Court quash
the subpoena or alternately, to modify the subpoena and enter a
protective order.

II.

STATUTORY FRAMEWORK
Title 15 U.S.C. § 46(j) provides, in pertinent part:
Upon a written request from a foreign
law enforcement agency to provide assistance
in accordance with this subsection, if the
requesting agency states that it is
investigating, or engaging in enforcement
proceedings against, possible violations of
laws prohibiting fraudulent or deceptive
commercial practices, or other practices
substantially similar to practices
prohibited by any provision of the laws
administered by the Commission . . . to
provide the assistance described in
paragraph (2) without requiring that the
conduct identified in the request constitute
a violation of the laws of the United
States.

15 U.S.C. § 46(j) (West 2006).
There is, however, a limitation:
The authority granted by this
subsection shall not authorize the
Commission to take any action or exercise
any power with respect to a bank, a savings
and loan institution described in section
57a(f)(3) of this title, a Federal credit
union described in section 57a(f)(4) of this
title, or a common carrier subject to the
Act to regulate commerce, except in
accordance with the undesignated proviso
following the last designated subsection of
this section.

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. . . .
Provided, That the exception of “banks,
savings and loan institutions described in
section 57a(f)(3) of this title, Federal
credit unions described in section 57a(f)(4)
of this title, and common carriers subject
to the Act to regulate commerce” from the
Commission’s powers defined in subsections
(a), (b), and (j) of this section, shall not
be construed to limit the Commission’s
authority to gather and compile information,
to investigate, or to require reports or
answers from, any person, partnership, or
corporation to the extent that such action
is necessary to the investigation of any
person, partnership, or corporation, group
of persons, partnerships, or corporations,
or industry which is not engaged or is
engaged only incidentally in banking, in
business as a savings and loan institution,
in business as a Federal credit union, or in
business as a common carrier subject to the
Act to regulate commerce.
Id.

III. DISCUSSION
A.

FTC’s Authority

Aegis contends that the FTC has no authority to obtain
discovery from it because the “common carrier” exemption
described in 15 U.S.C. § 45(a)(2) applies to the instant
subpoena.4

As such, Aegis contends that the subpoena is void ab

4

FTC notes that Aegis failed to raise this objection when
served with the subpoena, and as such, Aegis has waived this
contention. Regardless of waiver, the contention fails on the
merits.

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initio.

Aegis also argues that the FTC does not have authority

under 15 U.S.C. § 46(j)(1) because the Canadian proceeding does
not involve an activity that is substantially similar to a
practice that is prohibited by a law administered by the FTC.

1.

Common Carrier Exemption

The “common carrier” exemption5 includes “common carriers
subject to the Acts to regulate commerce, air carriers and
foreign air carriers subject to part A of subtitle VII of Title
49.”

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15 U.S.C. § 45(a)(2).

Aegis asserts that the Canadian

The “common carrier” exemption reads as follows:
The Commission is hereby empowered and
directed to prevent persons, partnerships,
or corporations, except banks, savings and
loan institutions described in section
57a(f)(3) of this title, Federal credit
unions described in section 57a(f)(4) of
this title, common carriers subject to the
Acts to regulate commerce, air carriers and
foreign air carriers subject to part A of
subtitle VII of Title 49, and persons,
partnerships, or corporations insofar as
they are subject to the Packers and
Stockyards Act, 1921, as amended [7 U.S.C.A.
§ 181 et seq.], except as provided in
section 406(b) of said Act [7 U.S.C.A. §
227(b) ], from using unfair methods of
competition in or affecting commerce and
unfair or deceptive acts or practices in or
affecting commerce.

15 U.S.C. § 45(a)(2) (West 2006) (emphasis added). The exemption
is also included in § 46 (j)(6).

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wireless telecommunications providers, defendants in the
Canadian proceeding, should be considered “common carriers.”
However, “‘Acts to regulate commerce’ means subtitle IV of
Title 49 and the Communications Act of 1934” and any follow-on
legislation. 15 U.S.C. § 44.

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.” 47 U.S.C. § 152(a).

See also FTC v. Verity Int’l Ltd.,

443 F.3d 48, 59 (2d Cir. 2006) (“foreign terminating carriers
are not carriers subject to the Communications Act, as
contemplated by the FTC Act’s common-carrier exemption”).
Therefore, neither Aegis nor any of the Canadian defendants are
“subject to the Acts to regulate commerce” under 47 U.S.C. §
45(a)(2).
Furthermore, the FTC is acting under the authority to
assist a foreign agency that is investigating or enforcing
possible violations of its country’s laws that prohibit
fraudulent or deceptive commercial practices.

15 U.S.C. § 46.

This authority exists even if the FTC could not address such
conduct if it occurred in the United States, see id. at § 46
(j)(1).

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2.

Substantial Similarity Contention

The Safe Web Act, in addition to authorizing the FTC to
assist a foreign agency with proceedings against “possible
violations of laws prohibiting fraudulent or deceptive
commercial practices,” also authorizes the FTC to assist a
foreign agency with proceedings against “other practices
substantially similar to practices prohibited by any provision
of the laws administered by the Commission.”

15 U.S.C. §

46(j)(1), see also Wahi v. Charleston Area Med. Ctr., Inc., 562
F.3d 599, 608 (4th Cir. 2009)(“Stated in the disjunctive, the
statute contemplates two independent avenues . . . .”).
In the instant case, the conduct at issue (deceptive
advertising and billing) is “substantially similar” to practices
prohibited by the FTC Act.

See, e.g., FTC v. Inc21.com, 745 F.

Supp. 2d 975, 996 n. 17, 1000-01, 1003-05 (N.D. Cal.
2010)(holding that the practice of placing unauthorized charges
on consumers’ phone bills was deceptive and unfair in violation
of Section 5 of the FTC Act).

Therefore, the alternate prong

authorizing FTC action is also satisfied.
Accordingly, the FTC has the authority to obtain discovery
in the instant case pursuant to 15 U.S.C. § 46 and 28 U.S.C. §
1782.

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B.

Undue Burden

Aegis argues that complying with the subpoena would impose
an undue burden upon it, including costs on the order of
$504,000 to $1,366,500 with regard to privilege claims.
argument is misplaced.

The

Aegis has presented no basis whatsoever

to believe that it has any privilege to assert.

It makes a

vague and unsupported reference to unknown types of privileges
that might be available to its customers under Canadian law.
Even if there were some such privilege, Aegis would have no
standing to assert it on behalf of its customer.
Aegis asserts that it is ready to comply with the Court’s
Order to produce some – but not all – of the responsive
documents within two days of a subsequent order.

Aegis has

assembled all of its work product and reports that it provided
to CWTA, but asserts that there are difficulties in regard to
certain materials that it did not provide to CWTA.6
The FTC avers that it has taken steps to minimize Aegis’s
burden, narrowing the scope of requests and offering to
reimburse the costs of reasonable copying.

Nevertheless, there

is a legitimate question regarding the ease of availability of
the advertising captures.

Aegis has explained that retrieving

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These include the collection of data such as actual
screenshots of advertising obtained as part of an automated
capture process (see Specification 3), Aegis’s internal analysis
(see Specifications 5 and 6).

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some of the data requested would require extensive forensic
analysis and, potentially, external assistance to extract, which
could be costly.7

Aegis also stated that, in the course of its

business, it provides its data collection and analysis services
to companies and to regulatory authorities for a fee.

Aegis

contends that it should be entitled to at least cost
reimbursement with regard to this data.
The Court recognizes that there remain issues requiring
resolution regarding the subpoena at issue.

Moreover, the

Canadian proceeding is in its early phases.

Thus, the Court

finds it most efficient and prudent to require immediate
production of all documents responsive to Specifications 1, 2,
and 4 and defer action with regard to the balance of the
documents at issue.

When the FTC receives8 the documents

responsive to Specifications 1, 2 and 4, it9 can consider – in
light of those documents and the circumstances of the Canadian
proceedings – modification of the other Specifications, seek
agreement with Aegis and, in the absence of agreement, seek an
Order regarding such other Specifications.

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It appears that FTC’s request for the advertising captures
goes beyond the scope of what was provided to CWTA and the raw
data that was captured is stored in Aegis’s data warehouse under
an alternate index method that is not easily matched to the CWTA
project.
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And provides to the Competition Bureau.
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Together with the Competition Bureau

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IV.

CONCLUSION
For the foregoing reasons:
1.

Third-Party Aegis Mobile, LLC’s Motion to Vacate
the January 30, 2014 Order on The FTC’s Motion to
Compel [Document 7] is DENIED.

2.

The document deemed to be a “Motion to Quash the
Commissioner’s Subpoena” is GRANTED IN PART and
DENIED IN PART.
a.

b.

2.

Aegis shall produce, within two days of this
Order, all documents responsive to
Specifications 1, 2, and 4 of the Subpoena
(as modified).
After review of materials supplied, the FTC
may file a further motion seeking production
of documents and data responsive to
Specifications 3, 5, and 6 of the Subpoena.

By October 30, 2014, the parties shall provide a
joint status report or separate status reports.

SO ORDERED, on Monday, August 4, 2014.

/s/__________
Marvin J. Garbis
United States District Judge

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APPENDIX – SPECIFICATIONS
1.

Produce all agreements between Aegis and the CWTA
and between Aegis and each Wireless Company
relating to the Work;

2.

Produce all Documents and Electronically Stored
Information that describe the nature and scope of
the Work Aegis performed for the CWTA and each
Wireless Company, and all policies and procedures
Aegis relied upon in performing the Work;

3.

Produce all Documents and Electronically Stored
Information relating to Aegis’ actual or proposed
Work for the CWTA and each Wireless Company;

4.

Produce all Documents and Electronically Stored
Information containing communications between
Aegis and the CWTA, between Aegis and each
Wireless Company, and between Aegis and each
Content Provider or Aggregator relating to the
Work;

5.

Produce all memoranda, reports, presentations,
analyses, appraisals and assessments in which
Aegis describes, expresses an opinion about, or
analyses Representations or other marketing
practices used to promote Digital Content; and

6.

Produce all memoranda, reports, presentations,
analyses, appraisals and assessments in which
Aegis describes, expresses an opinion about, or
analyses how or why customers are charged for the
purchase of Digital Content that they did not
authorize, including through practices that are
commonly known as “stacking” or “cramming”; or
how marketing practices facilitate charges for
Digital Content that customers did not authorize.

The Federal Trade Commission’s Motion to Compel Compliance with
Subpoena Issued Pursuant to 28 U.S.C. § 1782 [Document 4] App.
5, 8; see also FTC Letter [Document 4-7], which clarifies and
modifies these specifications.

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