Syntax Hints at Possible Suit to Beat $1.27 Million in FCC Fines

A Syntax-Brillian spokeswoman wouldn’t say if this means the company will sue the FCC in federal appeals court, as it vowed to do last year if the agency pursued the $2.9 million in proposed fines (CED June 6 p1). “We are evaluating all of our options at this time,” the spokeswoman told Consumer Electronics Daily. “We will probably use most or all of any appeal period to make that determination,” she said.

Syntax-Brillian has 30 days to pay the FCC $1.27 million in fines, the forfeiture order said. The FCC can refer the case to the Justice Department for collection in federal district court. There, the plaintiff is entitled to trial de novo -- from scratch -- on liability and the amount of any fine. The commission also could levy a penalty after issuing a notice and conducting a full evidentiary hearing before an administrative law judge. After exhausting its administrative remedies, Syntax-Brillian is entitled to seek judicial review in federal appeals court.

In recalculating the fine, the FCC cut 3,370 noncompliant DTV sets found since to have been shipped intrastate rather than interstate, as Syntax-Brillian had admitted, said the FCC forfeiture order. It also took 3,466 imported noncompliant sets off the list on grounds that the tuner mandate is best “served by treating the importation and subsequent interstate shipment of the same receiver as a single violation,” it said. “Because we cannot determine how many of the units imported by Syntax-Brillian were not subsequently shipped interstate, we will not impose a forfeiture against Syntax-Brillian for the 3,466 non-DTV- compliant receivers it imported,” the commission said.

The FCC wants to fine Syntax-Brillian $11,000 more for giving it incorrect or misleading shipment information during the inquiry, including the data on intrastate shipments. “Even absent an intent to deceive, a false statement may constitute an actionable violation” of the rules if given “without a reasonable basis for believing that the material factual information it contains is correct and not misleading,” the forfeiture order said. Syntax-Brillian, in its prepared statement, said it has cooperated with the FCC investigation and “responded in a timely manner to all of its inquiries.” Syntax-Brillian “fully supports the digital transition and will continue to educate consumers on the evolution to digital TV,” it said. Syntax-Brillian’s Olevia- brand LCD TVs “are 100 percent digital and have been so for nearly two years,” it said.

If Syntax-Brillian does go to court, it likely would reprise many of the same arguments it raised during the year- long investigation. According to the forfeiture order, Syntax-Brillian argued that the commission erred in issuing an NAL without first issuing a citation. It also argued the NAL violated the Administrative Procedure Act and due process, the order said. The $2.9 million in proposed fines was excessive, unconstitutional and inconsistent with FCC precedent, the company said, according to the order. The FCC rejected all the company’s arguments, except for where it agreed with Syntax-Brillian that the schedule of fines was “unlawfully duplicative” because it incorrectly treated importing and interstate shipping of a single receiver as separate violations.

Panasonic signed a $320,000 consent decree for shipping DTV sets that couldn’t adapt to new V-chip ratings systems, the commission said. Consent decree agreements were reached with six other CE makers. Panasonic deemed “that it would not be possible to reliably test the downloadable V-chip system in time for the manufacturing of 2006 TV models because there was no U.S. broadcasting of the new ratings table,” a Panasonic spokesman told us. “We decided to enable purchasers of the sets to do a free and easy-to-do upgrade using an SD Card or download from the web,” he said. “The upgrade is available to any customer who might want it, if and when a new ratings table is actually broadcast. We have notified purchasers that the upgrade is available on the web or can be obtained by calling the Panasonic Customer Call Center.”

LG, which signed a $1.7 million V-chip consent decree, pretty much had the same experience as Panasonic, spokesman John Taylor told us. LG “has implemented its solution,” he said. “The upgrade is available to any consumer who wants it, for if and when broadcasters actually start using it,” Taylor said.

Seven retail chains slapped with NALs proposing a total of $3.9 million in fines for improperly labeling analog-only sets at retail seem unlikely to sign consent decrees, judging from some statements’ angry tone. They have 30 days to pay the proposed fines or respond in writing why the forfeitures should be reduced or cancelled. Retailers are loath to sign onto standard decree language acknowledging that the FCC has statutory authority to impose labeling rules because they don’t think the agency has power to regulate retail practices. Retailers have worked hard to be good citizens by educating the public on DTV, volunteering for the coupon program, even educating FCC inspectors on what differentiates analog-only gear from digital, many said. Many also said they have gone to great expense clearing analog-only product from stores to get the monkey of FCC inspections off their backs.

NALs proposing fines for isolated infractions dating back 10 months hardly seem the thanks they feel they deserve from the government, some chains said. Best Buy, first of the major chains to declare it would exit the analog-only business, doing so by Oct. 1, took an especially hard line in a prepared statement Thursday reacting to $280,000 in fines the FCC is demanding for improperly labeling sets last June. “We have been in ongoing talks with the FCC on how Best Buy can continue to help consumers with multi-channel education efforts,” Best Buy said. “We believe the FCC’s decision to seek fines in lieu of this dialogue represents a step backward from our mutual goal of fully preparing consumers for the DTV transition. The FCC’s action today is in response to a relatively small number of instances. Best Buy took immediate action to address every FCC finding and ultimately took the landmark step of fully transitioning to DTV-compatible inventory.”

Best Buy doesn’t think it violated the FCC labeling rule “in any willful or repeated manner,” as the NAL alleged, the chain said. It also doesn’t think “the FCC’s attempt to seek fines in this case is warranted or justified,” it said. “While much remains to be done by everyone in the public and private sectors, including ourselves, we are proud of our efforts to date and will continue to educate consumers to help them through the DTV transition.”

Circuit City also is “disappointed that the FCC has not fully recognized the constructive efforts being made by retailers and others” in the DTV transition, it said. Disseminating “industry-leading information to consumers is one of our core commitments and we are ready to do our part to help Americans prepare for a significant shift in the way television is broadcast and received,” it said. “We have begun a year-long, multifaceted campaign to educate the public about the nation’s upcoming transition from analog to digital TV broadcasting and we are participating fully in the government’s coupon program to help consumers purchase DTV converter boxes.”

Despite being hit with $992,000 in proposed fines for analog-only labeling violations, Wal-Mart will continue “our good-faith efforts to comply with FCC requests,” the chain said. “We have already voluntarily invested millions of dollars in new technology, training, new product and consumer education for the FCC’s DTV transition program. We have made huge strides to do our part.”