Regulations and Compliance

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Small low-power AM radio stations across the country may be in for a big boost.  The Federal Communications Commission (FCC) proposed regulations last month to increase the power of more local stations while scaling back some of the interference protections currently enjoyed by the 57 Class A 50,000 watt stations which dominate the nation’s AM dial.

At present, small AM stations are obligated to limit their signal strength at certain times to avoid encroaching on Class A stations’ service.  This allows Class A stations to span thousands of miles across the country, especially at night.  But the FCC questions whether such protections are still relevant in the digital age as an increasing number of Americans who listen to the radio do so through the Internet or satellite radio.

According to a study conducted by the Pew Research Center, 44% of cellphone owners in the U.S. streamed radio stations through their phones while driving in 2018 as opposed to just 6% in 2010.  Further, the study revealed podcast listenership has increased dramatically over the last decade from 18% in 2008 to 44% in 2018.  With respect to satellite radio, over 33 million Americans currently subscribe to Sirius XM Radio according to a study conducted by Statistica.   However, the Pew study indicated 90% of Americans aged 12 and older listen to terrestrial AM or FM radio broadcasts in a given week, suggesting traditional radio remains alive and well.

Critics of the FCC’s proposal claim increased interference from small stations will significantly hamper the signals for the nation’s most popular broadcasts, causing AM listenership to drop.  Additionally, they contend that signal interference may reduce the effectiveness of Class A stations’ emergency broadcast systems, which depend on uninterrupted service.  Conversely, supporters of the new regulations say these concerns are overblown and the AM dial could benefit greatly by the increased viability of diverse and community-centered regional radio.

Public comments on the proposed regulations are due in December.  The FCC will then have thirty days to consider this feedback and issue a reply.

The post below was first posted by my colleague Jeff Polsky on the Fox Rothschild California Employment Law blog. We are reprinting it here because the recent California Supreme Court decision that it describes will have tremendous impact on the way many producers do business.

It’s common practice for producers to engage cast and crew as independent contractors rather than as employees. This will now be far more problematic, at least in California. Anyone who engages personnel in this state should read this blog and take a hard look at their hiring practices.


Jeff Polsky writes:

Determining whether a California worker is an independent contractor or an employee has always been difficult. Judges deciding the issue have complained that the test used by California courts “provides nothing remotely close to a clear answer.” Then there was the nail salon that was told by one state agency that its workers were employees and by another that they were independent contractors. So there’s no question that the law in this area has been messy.

On Monday, it got considerably messier. That’s when the California Supreme Court issued its decision in Dynamex Operations West, Inc. v. Superior Court. For years — even decades — judges, government agencies, and lawyers have interpreted the law to say that the key to distinguishing between employees and independent contractors was whether the company had the right to control the manner and means by which the worker accomplished the desired result. So if drivers for a gig-economy car service decided what days to work, when to start work on a particular day, where to work, what to wear, when to take breaks and for how long, and when to quit for the day, there was an excellent chance that they’d be considered independent contractors,

Under the California Wage Orders, which guarantee employees a minimum wage, maximum hours, overtime compensation, meal and rest breaks, and more, that is no longer the case. Now, according to the California Supreme Court, companies must meet a three-prong test to establish independent contractor status (“the ABC test”).

  • A) The company must not be able to control or direct what the worker does, either by contract or in actual practice. This is similar to the test used in the past.
  • B) The worker must perform tasks outside of the hiring entity’s usual course of business. So if you’re a driver for a ride service, a delivery person for a delivery service, or a seamstress for a clothing company, you can’t be an independent contractor no matter how little control the company has over you.
  • C) The worker must be engaged in an independently established trade, occupation, or business. It’s not enough that the company doesn’t prohibit the worker from having his own business or working for others. Instead, the court will look at factors such as whether the business is incorporated or licensed, whether it’s advertised, and whether it offers services to the public or other potential customers.

It is the employers burden to satisfy all three prongs to establish that the worker is an independent contractor. If it fails to establish one, the worker is entitled to be treated as an employee under the Wage Orders. (The Wage Orders themselves are not particularly helpful in this regard. For example, they circularly define “employee” as ” any person employed by an employer.”)

The Court spent 80+ pages explaining its rationale. Nowhere in that lengthy analysis was any recognition of the upheaval this opinion will cause. Millions of workers in the state that were considered independent contractors will now be deemed employees. This will require employers who have done everything they could to follow the law as it was then understood to reevaluate the nature of the relationship with many of their workers and either modify the relationship or provide them the pay and treatment required by the Wage Orders. They also face litigation, including potential class actions, from workers complaining that they were misclassified. And since this case only addresses the wage order definition, they need to apply different standards (which can lead to different conclusions) in deciding how to characterize workers for purposes such as workers compensation and payroll taxes. As I said, a messy situation just got messier.

The digitization of content is forcing courts to take a fresh look at basic copyright concepts. The Disney v. Redbox case that I’ve recently blogged on addressed whether a digital download code is a “copy” of a work. Now a New York District Court has taken up the meaning of “display” in a case that could have big consequences for the way news outlets do business.

A photographer named Justin Goldman snapped a candid photo of New England Patriots quarterback Tom Brady with Boston Celtics general manager Danny Ainge. Goldman posted the photo on Snapchat, whence it went viral, including on Twitter. The defendant news outlets, including Breitbart, Time and the Boston Globe, embedded the tweets together with the photo in stories concerning whether Brady was assisting the Celtics to recruit a player named Kevin Durant. Goldman sued for copyright infringement. The defendants moved for summary judgment on the ground that they had merely linked to an image hosted on Twitter’s servers and did not themselves maintain copies.

Judge Katherine Forrest rejected this position. In her view, the location of the server on which an image is stored is merely a technical distinction that is not relevant to whether the copyright owner’s display right was infringed. Judge Forrest acknowledged that this view is contrary to the position of the 9th Circuit, but held that it is supported by Supreme Court precedent and the language and legislative history of the Copyright Act.

This decision does not necessarily mark the end of the road for the news organizations, however, In response to their plea that a loss would “cause a tremendous chilling effect on the core functionality of the web,” the judge stressed that they still have strong affirmative defenses. A fair use argument is always available, particularly to straight news organizations. The judge also raised the possibility that Goldman had released the photo into the public domain by posting it to Snapchat in the first place.

There’s a certain logic to Judge Forrest’s conclusion that the viewer’s experience of a photo is the same whether the defendant has copied it to its own server or linked to someone else’s. On the other hand, a central feature of Twitter and other social media platforms is that posts can be readily shared. The ecosystems of these platforms could be seriously disrupted if every shared post is regarded as a new publication for copyright purposes. Courts and possibly Congress will be working for the next several years to draw the appropriate lines.

In another controversial move, the FCC has approved by a 3-2 vote the adoption of the ATSC 3.0 standard for broadcast TV, known as Next Gen TV. This IP-based standard will permit over-the-air broadcasters to offer Ultra High Definition signals and improve mobile transmission. Sounds good, right? Opponents cite two concerns.

Copyright: scanrail / 123RF Stock Photo

Using Next Gen TV, broadcasters will be able to track individualized viewing data to deliver targeted ads. This is a red flag for consumer and privacy advocates. Using language that sounds more sinister than was likely intended, one executive for Sinclair Broadcast Group praised the new standard’s ability to gather“perfect data” about consumers. “We’ll know where you are, who you are, and what you’re doing—just like you do now, just like everybody does now, the Internet does….”

The second big objection is that the change will impose unnecessary costs on consumers. Current televisions cannot receive Next Gen signals. The FCC imposed a five-year transition period during which broadcasters must simulcast using both the current and new standards. If they abandon the current standard after that period, broadcast consumers will be forced to buy new equipment.

My partner Nancy Yaffe has just posted a blog with disturbing implications for California entertainment lawyers. As young practitioners we  all were taught that every agreement with a person providing services on a film or TV show must include a provision that the results and proceeds of the person’s services are a “work made for hire” under copyright law.  This language is as important for entertainment lawyers as the Prime Directive is for Capt. Kirk on Star Trek. It now appears that the California EDD takes the position that the presence of those four words in a contract creates a presumption that the service provider is an employee, not a contractor. The Department will take this position even if none of the other indicia of employment are present, and regardless of the plain intent and structure of the Copyright Act.

Law concept: circuit board with  copyright icon, 3d render

Producers can still obtain copyright ownership using assignment language, but this has drawbacks, including that the assignor can terminate the assignment after 35 years. This presents producers with a difficult choice. Proceed as usual and run the risk of being assessed for back taxes and penalties, or engage all cast and crew as employees, with the inconvenience and cost that can entail.

Read Nancy’s enlightening blog here.

Here in the Hollywood bubble, it’s easy to get wrapped up in our own tales of heartbreak, victory and scandal and forget that events outside of LA can also impact the entertainment business. One of these is that the FCC is now Republican-controlled. The new FCC chair Ajit Pai has already signaled that we can expect significant policy shifts. Here are two to watch.

Copyright: scanrail / 123RF Stock Photo

Net Neutrality: This blog has been following the net neutrality saga, most recently here in an article posted after the Presidential election. Net neutrality is the principle that internet service providers (ISPs) must treat all content in their pipes equally, without speeding or slowing transmission for favored or disfavored providers. In 2015, the FCC reclassified ISPs as a common carrier equivalent to telephone companies in order to impose strict neutrality rules. FCC chair Pai has expressed his opposition to the rules, but the issue is not on the FCC’s published November docket. There is no reason to assume, however, that Pai’s stance has altered, only that he is deferring for the present what will be a very hotly contested change.

Ownership Rules: For decades, the FCC has maintained rules governing ownership of broadcast stations in order to encourage local news coverage and diversity in programming. That may be about to change. On October 25, Pai announced proposed rulemaking that would radically overhaul this regulatory scheme. The proposals under discussion include:

  • Permitting one company to own a daily newspaper and a radio or TV station in the same market.
  • Eliminating a rule that requires at least eight independently owned TV stations to remain in a market after two stations combine ownership.
  • Loosening restrictions on the number of television and radio stations that can be owned by a single entity in a market.

These moves have received the support of trade groups representing both broadcast stations and newspaper groups, who argue that they need economies of scale to compete in the 21st century marketplace with giant digital media outlets such as YouTube and Facebook.

These steps follow an FCC action earlier this year lifting the cap on the total number of stations that a single company can own. This opened the door for Sinclair Broadcast Group to pursue its intended purchase of Tribune Media, which would result in Sinclair’s ownership of stations covering 70% of all US television viewers.

The FCC also plans to eliminate a rule that required broadcast stations to have a physical studio in or near the communities they serve. While not a change in ownership rules, it will make it easier for large station groups to centralize their operations.

After eight years of a Democratic administration, it’s not surprising to see the regulatory pendulum swing back to favor free market forces. There is also no doubt that FCC commissioners of all political stripes must address the radical changes in the media landscape brought on by the explosion of the internet. Time will tell whether Chairman Pai’s approach is the right one.

Charlie Nelson Keever writes:

The Supreme Court ruled this morning that a federal law that prohibits the government from registering trademarks that “disparage” others violates the First Amendment.

Members of an Asian-American rock band filed a lawsuit after the U.S. Patent and Trademark Office (PTO) kept the band from registering its name, The Slants, a reference to the derisive slur sometimes wielded against Asian-Americans. The PTO said the name was likely to denigrate a significant number of Asian-Americans in violation of the Lanham Act, which prohibits any trademark that could “disparage … or bring … into contempt[t] or disrepute” any “persons, living or dead.”

Rock star cartoon
Copyright: kennykiernanillustration / 123RF Stock Photo

The band’s founder, Simon Tam, said the point of the band’s name is just the opposite. “[Growing up] the notion of having slanted eyes was always considered a negative thing… Kids would pull their eyes back in a slant-eyed gesture to make fun of us. … I wanted to change it to something that was powerful, something that was considered beautiful or a point of pride instead.”

The Supreme Court sided with The Slants.

“The disparagement clause violates the First Amendment’s Free Speech Clause,” Justice Samuel Alito wrote in his opinion for the court. “Contrary to the Government’s contention, trademarks are private, not government speech.” Alito noted that the government “still has an interest in preventing speech expressing ideas that offend,” but suggested the “disparagement clause” was overly broad.

This case could have a broad impact on how the First Amendment will be applied in other trademark cases. In 2014, the PTO canceled the Washington Redskins’ trademarks, finding the term “Redskins” disparages Native Americans under the same statutory clause that was quashed by the Supreme Court today. The team is calling today’s ruling a win. Redskins attorney Lisa Blatt said in a statement, “The Supreme Court vindicated the team’s position that the First Amendment blocks the government from denying or cancelling a trademark registration based on the government’s opinion.” The Redskins’ case has been on hold in the U.S. Court of Appeals for the 4th Circuit in Richmond, pending today’s decision.


Charlie Nelson Keever is a summer associate in the firm’s Los Angeles office.

Copyright: ratru / 123RF Stock Photo

We reported previously that LA City Attorney Mike Feuer had brought misdemeanor criminal charges against five casting workshops and 25 individuals under the Krekorian Talent Scam Prevention Act. Feuer alleged that the workshops–purportedly for training actors in audition techniques–were actually pay-to-play schemes in which aspiring thespians would pay for the opportunity to be seen by casting directors.

On June 5, one of the accused, Bradley Sachs, pleaded no contest to the charges. He was placed on 36 months summary probation and sentenced to serve either 10 days in jail or perform 150 hours of community service. He also agreed to pay investigative costs, and not to be involved in any talent training service until completion of his probation. Sachs’ company, The Actors Alley, shut down when the charges were first announced.

Although it had previously expressed support for the defendants, the Casting Society of America declined to make a statement on Sachs’ plea on the grounds that he is not a CSA member.

 

Copyright: ratru / 123RF Stock Photo
Copyright: ratru / 123RF Stock Photo
Los Angeles City Attorney Mike Feuer filed criminal charges last month against five casting workshops, their owners and employees, alleging violations of the Krekorian Talent Scam Prevention Act. Under the Act, it is a crime to charge a performer money for the right to audition.

The workshops bill themselves as opportunities for performers to read in front of professional casting directors for the purpose of receiving notes and guidance on their auditioning skills. But Feuer expressed the City’s position in a press conference as follows: “As the entertainment capital of the world, Los Angeles continues to attract thousands of aspiring performers from across the world. Unfortunately, pay-to-play casting schemes often exploit their dreams, purely for profit. My office will continue to crack down on those who would take advantage of performers desperate for work.” The performer’s union SAG-AFTRA issued a statement strongly supporting Feuer’s action.

The charges followed a year-long investigation in which a professional actor working as an undercover informant attended 13 workshops conducted by the five defendant companies. Many of the defendants are well-known casting directors and associates who have worked on shows such as Santa Clarita Diet, Criminal Minds and The Big Bang Theory, among others.

The TV manufacturer Vizio agreed to pay $2.2 million to settle a lawsuit brought by the Federal Trade Commission and the State of New Jersey over its data collection practices.

Smart TV
Copyright: scanrail / 123RF Stock Photo

The lawsuit alleged that the company’s internet-connected smart TVs were recording exactly what consumers were watching second by second. The sets were able to collect this data for shows from all sources, whether from cable or broadband service providers, set-top boxes, streaming devices, DVD players, or over-the-air broadcasts, amounting to 100 billion data points daily on millions of sets. Vizio then paired this information to customers’ IP addresses and sold it to data aggregators who in turn used the information to identify each individual consumer’s viewing habits, matched with detailed demographic information such as age, gender, income and education. The only information lacking were viewers’ actual names, but this was no impediment to companies eager to be able to feed highly targeted advertising to consumers.

In addition to the cash payment, Vizio agreed, without admitting liability, to stop unauthorized tracking, to prominently disclose its TV viewing collection practices, and to get consumers’ express consent before collecting and sharing viewing information. In addition, the company must delete most of the data it collected under the program.

What’s worth keeping in mind is that Vizio’s mistake wasn’t in collecting the data–that’s no different from what social media platforms and internet search companies do as their core business models. It was just not sufficiently transparent about its practices. With improved disclosure, it should be back to business as usual.