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Before the
Federal Communications Commission
Washington, D.C. 20554
)
In the Matter of File No. EB-07-SE-166
)
XLNT Idea, Inc. NAL/Acct. No. 200932100004
)
San Diego, California FRN # 0018234369
)
FORFEITURE ORDER
Adopted: December 7, 2009 Released: December 9, 2009
By the Chief, Spectrum Enforcement Division, Enforcement Bureau:
I. introduction
1. In this Forfeiture Order ("Order"), we issue a monetary forfeiture in
the amount of fourteen thousand dollars ($14,000) against XLNT Idea,
Inc. ("XLNT Idea") for willful and repeated violations of Section
302(b) of the Communications Act of 1934, as amended ("Act"), and
Section 2.803(a) of the Commission's Rules ("Rules"). The noted
violations involve the marketing of unauthorized digital devices in
the United States.
2. On November 4, 2008, the Chief, Spectrum Enforcement Division,
Enforcement Bureau ("Division") issued a Notice of Apparent Liability
("NAL") for Forfeiture to XLNT Idea in the amount of fourteen thousand
dollars ($14,000). XLNT Idea filed a response to the NAL on December
5, 2008.
II. background
3. On February 11, 2008, the Division issued a letter of inquiry ("LOI")
to XLNT Idea regarding a complaint received alleging that XLNT Idea
was marketing the Nexis 100AP AutoPrinter, the Nexis 100AP Publisher,
and the Xi440 CD/DVD Printer in the United States without the
appropriate labels as required in Section 15.19 of the Rules, and
prior to testing for compliance with Sections 15.107 and 15.109 of the
Rules. XLNT Idea filed its response to the LOI on March 12, 2008, and
stated that it manufactures the Nexis 100AP AutoPrinter, the Nexis
100AP Publisher, and the Xi440 CD/DVD Printer at its facility in San
Diego, California and markets all three devices for both residential
and commercial use, and that until receipt of the LOI it was unaware
of the applicable FCC technical and labeling requirements. XLNT Idea
stated further that subsequent to receipt of the LOI, it had completed
testing of the devices, and asserted that the testing demonstrates
that it has satisfied the Declaration of Conformity requirements for
these devices.
4. On November 4, 2008, the Division released a NAL finding that XLNT
Idea marketed the Nexis 100AP AutoPrinter, the Nexis 100AP Publisher,
and the Xi440 CD/DVD Printer in the United States prior to
authorization. We noted that the Nexis 100AP AutoPrinter and the Nexis
100AP Publisher are identical except that the Nexis 100AP Publisher
can burn cds and dvds; therefore, testing and authorization of the
Nexis 100AP Publisher is sufficient to demonstrate compliance of the
Nexis 100AP AutoPrinter. Thus, the NAL found that XLNT Idea marketed
two distinct unauthorized devices prior to authorization. XLNT Idea's
marketing of each of these devices was found to be a separate
continuing violation. Accordingly, the Division proposed a forfeiture
in the amount of $14,000 for the apparent willful and repeated
violations of Section 302(b) of the Act and Section 2.803(a) of the
Rules.
5. In its NAL Response, XLNT Idea does not dispute that it marketed and
manufactured two distinct unauthorized devices prior to authorization.
Instead, it only seeks a reduction or cancellation of the proposed
forfeiture due to an inability to pay. In support of this claim, XLNT
Idea asserts that its business is funded by debt and operates with
limited resources. XLNT explains that even after three years and a few
successful products, it is not financially able to control its
manufacturing process. XLNT Idea also asserts that it could not afford
expensive consultants to guide it through regulatory and other legal
issues. XLNT Idea states that the proposed forfeiture is a heavy
burden. To substantiate these claims, XLNT Idea submits federal tax
returns for 2006, 2007, and a financial statement for 2008.
III. DISCUSSION
6. The forfeiture amount proposed in this case was assessed in accordance
with Section 503(b) of the Act, Section 1.80 of the Rules, and the
Commission's Forfeiture Policy Statement. In assessing forfeitures,
Section 503(b)(2)(E) of the Act requires that we take into account the
nature, circumstances, extent and gravity of the violation and, with
respect to the violator, the degree of culpability, any history of
prior offenses, ability to pay, and such other matters as justice may
require.
7. XLNT Idea, in responding to the NAL, does not dispute that it marketed
and manufactured two distinct unauthorized devices prior to
authorization, and it only seeks a reduction or cancellation of the
proposed forfeiture due to an inability to pay. We have considered
XLNT Idea's response to the NAL in light of the above statutory
factors, our Rules, and the Forfeiture Policy Statement. We conclude
that XLNT Idea willfully and repeatedly violated Section 302(b) of the
Act and Section 2.803(a) of the Rules and that no mitigating
circumstances warrant cancellation or further reduction of the
proposed forfeiture amount.
8. In analyzing financial hardship claims, the Commission generally looks
to a company's gross revenues as a reasonable and appropriate
yardstick to determine their ability to pay assessed forfeitures.
Indeed, the Commission has stated that if a company's gross revenues
are sufficiently large, the fact that net losses are reported, alone,
does not necessarily signify inability to pay.
9. Based on the documentation provided, we find that XLNT Idea has not
demonstrated that a reduction or cancellation of the proposed
forfeiture is warranted. XLNT Idea's financial documents for the most
recent three-year period reflect gross revenues that effectively
negate the financial hardship claim as it relates to the forfeiture
amount before us. Specifically, the proposed forfeiture of $14,000
expressed as a percentage of XLNT Idea's gross revenues is
significantly less than the threshold used to determine an inability
to pay reduction. In this case, the forfeiture represents a percentage
of XLNT Idea's gross revenues that falls well within the percentage
range generally considered payable. As the Commission has recognized,
if a violator could escape meaningful sanctions for violations of the
Rules by seeking an inability to pay reduction that is unsupported by
its gross revenues, it would be in a position to undermine the
remedial purposes of Section 503 of the Act.
10. As a result of our review, we conclude that that no reduction or
cancellation is warranted for an inability to pay. Accordingly, we
find that XLNT Idea willfully and repeatedly violated Section 302(b)
of the Act and Section 2.803(a) of the Rules and that a forfeiture in
the amount of $14,000 is appropriate.
IV. ORDERING Clauses
11. Accordingly, IT IS ORDERED that, pursuant to Section 503(b) of the
Act, and Sections 0.111, 0.311 and 1.80(f)(4) of the Rules, XLNT Idea,
Inc. IS LIABLE FOR A MONETARY FORFEITURE in the amount of fourteen
thousand dollars ($14,000) for willful and repeated violation of
Section 302(b) of the Act and Section 2.803(a) of the Rules.
12. Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The
payment must include the NAL/Account Number and FRN Number referenced
above. Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payment by wire transfer may be made to ABA Number 021030004,
receiving bank TREAS/NYC, and account number 27000001. For payment by
credit card, an FCC Form 159 (Remittance Advice) must be submitted.
When completing the FCC Form 159, enter the NAL/Account number in
block number 23A (call sign/other ID), and enter the letters "FORF" in
block number 24A (payment type code). Requests for full payment under
an installment plan should be sent to: Chief Financial Officer --
Financial Operations, 445 12th Street, S.W., Room 1-A625, Washington,
D.C. 20554. Please contact the Financial Operations Group Help Desk at
1-877-480-3201 or Email: ARINQUIRIES@fcc.gov with any questions
regarding payment procedures. XLNT Idea, Inc. will also send
electronic notification on the date said payment is made to Celia
Lewis at Celia.Lewis@fcc.gov and to Ricardo Durham at
Ricardo.Durham@fcc.gov.
13. IT IS FURTHER ORDERED that a copy of this Order shall be sent by first
class mail and certified mail return receipt requested to Chalapathi
Rao Atluri, Chief Executive Officer, XLNT Idea, Inc., 6262 Ferris Sq.,
San Diego, CA 92121.
FEDERAL COMMUNICATIONS COMMISSION
Kathryn S. Berthot
Chief, Spectrum Enforcement Division
Enforcement Bureau
47 U.S.C. S: 302a(b).
47 C.F.R. S: 2.803(a).
XLNT Idea, Inc., Notice of Apparent Liability for Forfeiture, 23 FCC Rcd
16417 (Enf. Bur., Spectrum Enf. Div. 2008) ("NAL").
See Letter from Chalapathi R. Atluri, CEO, XLNT Idea, Inc., to the
Spectrum Enforcement Division, Enforcement Bureau, Federal Communications
Commission (December 3, 2008) ("NAL Response").
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
Enforcement Bureau, Federal Communications Commission to XLNT Idea, Inc.
(February 11, 2008).
47 C.F.R. S: 15.19.
47 C.F.R. S:S: 15.107, 15.109.
See Letter from Michael J. Schrier, Esquire, counsel for XLNT Idea, Inc.,
to Gabriel Collazo, Spectrum Enforcement Division, Enforcement Bureau,
Federal Communications Commission (March 12, 2008) ("LOI Response").
Id. at 2-3, 7-8, 12.
See LOI Response at 4-6, 8-10, 13-14. XLNT Idea noted that because the
Nexis 100AP AutoPrinter and Nexis 100AP Publisher are identical except
that the Nexis 100AP AutoPrinter cannot burn cds or dvds, it was only
necessary to test the Nexis 100AP Publisher and the tests results for the
Nexis 100AP Publisher also demonstrate compliance of the Nexis 100AP
AutoPrinter. Id. at 4. The test report covering the Nexis 100AP
AutoPrinter and Nexis 100AP Publisher was dated February 28, 2008. The
test report for the Xi440 CD/DVD Printer was dated March 8, 2008.
NAL, 23 FCC Rcd at 16420.
Id., citing San Jose Navigation, Inc., Notice of Apparent Liability for
Forfeiture, 21 FCC Rcd 2873 (2006), forfeiture ordered, 22 FCC Rcd 1040
(2007), response pending; Samson Technologies, Inc., Notice of Apparent
Liability for Forfeiture, 19 FCC Rcd 4221, 4225 (2004), consent decree
ordered, 19 FCC Rcd 24509 (2004) (both finding that the marketing of each
separate model of unauthorized equipment constitutes a separate
violation).
NAL Response at 1.
Id.
Id.
Id.
47 U.S.C. S: 503(b).
47 C.F.R. S: 1.80.
The Commission's Forfeiture Policy Statement and Amendment of Section 1.80
of the Rules to Incorporate the Forfeiture Guidelines, Report and Order,
12 FCC Rcd 17087 (1997), recon. denied, 15 FCC Rcd 303 (1999) ("Forfeiture
Policy Statement").
47 U.S.C. S: 503(b)(2)(E).
Section 312(f)(1) of the Act defines "willful" as "the conscious and
deliberate commission or omission of [any] act, irrespective of any intent
to violate" the law. 47 U.S.C. S: 312(f)(1). The legislative history of
Section 312(f)(1) of the Act clarifies that this definition of willful
applies to Sections 312 and 503(b) of the Act, H.R. REP. No. 97-765, 51
(Conf. Rep.), and the Commission has so interpreted the terms in the
Section 503(b) context. See Southern California Broadcasting Co.,
Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 (1991), recon.
denied, 7 FCC Rcd 3454 (1992) ("Southern California").
Section 312(f)(1) of the Act defines "repeated" as "the commission or
omission of [any] act more than once or, if such commission or omission is
continuous, for more than one day." 47 U.S.C. S: 312(f)(1). See also
Southern California, 6 FCC Rcd at 4388 (applying this definition of
repeated to Sections 312 and 503(b) of the Act).
See PJB Communications of Virginia, Inc., Memorandum Opinion and Order, 7
FCC Rcd 2088, 2089 (1992) ("PJB Communications"); see also Forfeiture
Policy Statement, 12 FCC Rcd at 17106-07.
See PJB Communications, 7 FCC Rcd at 2089 (noting that information about
net losses may be relevant in assessing an inability to pay claim, but
where "gross revenues are sufficiently great ... the mere fact that a
business is operating at a loss does not itself mean that it cannot afford
to pay a forfeiture.") See also Local Long Distance, Inc., Forfeiture
Order, 15 FCC Rcd 24385, 24389 (2000), recon. denied, 16 FCC Rcd 10023,
10025 (2001); Independent Communications, Inc., Memorandum Opinion and
Order, 14 FCC Rcd 9605 (1999), recon. denied, 15 FCC Rcd 16060 (2000);
Frank Neely, Forfeiture Order, 19 FCC Rcd 16135, 16135-16136 (Enf. Bur.
2007), recon. denied, 22 FCC Rcd 1434, 1436 (Enf. Bur. 2007) ("Frank
Neely"); Hoosier Broadcasting Corporation, Forfeiture Order, 14 FCC Rcd
3356 (Consumer Info. Bur. 1999), recon. denied, 15 FCC Rcd 8640, 8641
(Enf. Bur. 2002) ("Hoosier Broadcasting"); Side by Side, Inc., Forfeiture
Order, 23 FCC Rcd 7393, 7395 (Enf. Bur., Spectrum Enf. Div. 2008), review
pending.
See, e.g., PJB Communications, 7 FCC Rcd at 2089 (forfeiture not deemed
excessive where it represented approximately 2.02 percent of the
violator's gross revenues); Hoosier Broadcasting, 15 FCC Rcd at 8641
(forfeiture not deemed excessive where it represented approximately 7.6
percent of the violator's gross revenues).
See, e.g., Frank Neely, 22 FCC Rcd at 1435.
47 C.F.R. S:S: 0.111, 0.311, 1.80(f)(4).
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Federal Communications Commission DA 09-2545
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Federal Communications Commission DA 09-2545