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Before the
Federal Communications Commission
Washington, D.C. 20554
)
) File No.: EB-10-SE-055
In the Matter of
) Acct. No.: 201232100035
Fender Musical Instruments Corporation
) FRN: 002963429
)
CONSENT DECREE
The Enforcement Bureau of the Federal Communications Commission and Fender
Musical Instruments Corporation, by their authorized representatives,
hereby enter into this Consent Decree for the purpose of terminating the
Enforcement Bureau's investigation into possible violations of Section
302(b) of the Communications Act of 1934, as amended, and Sections 2.803,
2.1203, 2.1204, 2.1205, 15.19, 15.21, and 15.105 of the Commission's rules
pertaining to the marketing of digital radio frequency devices, such as
bass amplifiers, pre-amplifiers, tuners, and audio mixers.
I. DEFINITIONS
1. For the purposes of this Consent Decree, the following definitions
shall apply:
a. "Act" means the Communications Act of 1934, as amended, 47 U.S.C. S:
151 et seq.
b. "Adopting Order" means an order of the Bureau adopting the terms of
this Consent Decree without change, addition, deletion, or
modification.
c. "Bureau" means the Enforcement Bureau of the Federal Communications
Commission.
d. "Commission" and "FCC" mean the Federal Communications Commission and
all of its bureaus and offices.
e. "Communications Laws" means collectively, the Act, the Rules, and the
published and promulgated orders and decisions of the Commission to
which FMIC is subject by virtue of its business activities, including
but not limited to, the Equipment Marketing Rules.
f. "Compliance Plan" means the compliance obligations, program, and
procedures described in this Consent Decree at paragraph 9.
g. "Covered Employees" means all employees and agents of FMIC who
perform, or supervise, oversee, or manage the performance of, duties
that relate to FMIC's responsibilities under the Equipment Marketing
Rules.
h. "Digital Device" means an unintentional radiator (device or system) as
defined in Section 15.3(k) of the Rules.
i. "Effective Date" means the date on which the Bureau releases the
Adopting Order.
j. "Equipment Marketing Rules" means Section 302(b) of the Act, Sections
2.803, 2.1203, 2.1204, 2.1205, 15.19, 15.21, and 15.105 of the Rules,
and other Communications Laws governing the marketing of radio
frequency devices within the United States and its territories.
k. "FMIC" means Fender Musical Instruments Corporation, and its
divisions, subsidiaries, predecessors-in-interest and
successors-in-interest.
l. "Investigation" means the investigation commenced by the Bureau's June
1, 2010, letter of inquiry regarding whether the marketing of certain
Digital Devices by FMIC complies with the Equipment Marketing Rules.
m. "Operating Procedures" means the standard, internal operating
procedures and compliance policies established by FMIC to implement
the Compliance Plan.
n. "Parties" means FMIC and the Bureau, each of which is a "Party."
o. "Rules" means the Commission's regulations found in Title 47 of the
Code of Federal Regulations.
II. BACKGROUND
1. Pursuant to Section 302(b) of the Act and Sections 2.803, 15.19,
15.21, and 15.105 of the Rules, certain Digital Devices may not be
marketed in the United States unless the devices comply with the
applicable technical standards as well as the administrative
requirements relating to equipment labeling and consumer disclosure.
Section 2.803(e)(4) of the Rules defines "marketing" as the "sale or
lease, or offering for sale or lease, including advertising for sale
or lease, or importation, shipment or distribution for the purpose of
selling or leasing or offering for sale or lease."
2. Pursuant to Sections 2.1203, 2.1204, and 2.1205 of the Rules, a
Digital Device may not be imported into the United States unless the
importer, ultimate consignee, or customs broker, files with the
United States Customs and Border Protection an FCC Form 740 (or the
electronic equivalent thereof) declaring that the device meets one of
the import conditions set forth in Section 2.1204 of the Rules. FMIC
markets Digital Devices, including bass amplifiers, pre-amplifiers,
tuners, audio mixers, and wireless microphones, as well as products
packaged with and/or including Digital Devices, used in connection
with musical instruments. These Digital Devices are unintentional
radiators subject to authorization prior to marketing, via either the
Commission's equipment verification or declaration of conformity
procedures.
3. On June 1, 2010, the Bureau's Spectrum Enforcement Division
(Division) issued a letter of inquiry (LOI) to FMIC, directing FMIC
to submit a sworn written response to a series of questions relating
to FMIC's manufacture, importation, and marketing of Digital Devices.
FMIC responded to the LOI on July 30, 2010. In its LOI Response, FMIC
submitted information concerning certain FENDER and SWR brand Digital
Devices marketed by the company. According to FMIC, certain of its
newer Digital Device models are substantially similar to older models
that have been previously authorized. FMIC further stated that it was
uncertain as to the labeling and user manual language requirements
that were applicable to some of its Digital Devices. FMIC also
provided information related to its importation of certain Digital
Devices and its obligation to file customs Form 740s with the United
States Customs and Border Protection in connection with the
importation of such Digital Devices. In subsequent supplemental
filings, FMIC supplied further information relevant to the
Investigation. The Bureau and FMIC entered into tolling agreements to
toll the statute of limitations.
III. TERMS OF AGREEMENT
4. Adopting Order. The Parties agree that the provisions of this Consent
Decree shall be subject to final approval by the Bureau by incorporation
of such provisions by reference in the Adopting Order.
5. Jurisdiction. FMIC agrees that the Bureau has jurisdiction over it and
the matters contained in this Consent Decree and that the Bureau has the
authority to enter into and adopt this Consent Decree.
6. Effective Date; Violations. The Parties agree that this Consent Decree
shall become effective on the Effective Date as defined herein. As of the
Effective Date, the Adopting Order and this Consent Decree shall have the
same force and effect as any other order of the Commission. Any violation
of the Adopting Order or of the terms of this Consent Decree shall
constitute a separate violation of a Commission order, entitling the
Commission to exercise any rights and remedies attendant to the
enforcement of a Commission order.
7. Termination of Investigation. In express reliance on the covenants and
representations in this Consent Decree and to avoid further expenditure of
public resources, the Bureau agrees to terminate the Investigation. In
consideration for the termination of the Investigation, FMIC agrees to the
terms, conditions, and procedures contained herein. The Bureau further
agrees that in the absence of new material evidence, the Bureau will not
use the facts developed in this Investigation through the Effective Date,
or the existence of this Consent Decree, to institute on its own motion
any new proceeding, formal or informal, or take any action on its own
motion against FMIC concerning the matters that were the subject of the
Investigation. The Bureau also agrees that in the absence of new material
evidence it will not use the facts developed in this Investigation through
the Effective Date, or the existence of this Consent Decree, to institute
on its own motion any proceeding, formal or informal, or take any action
on its own motion against FMIC with respect to FMIC's basic
qualifications, including its character qualifications, to be a Commission
licensee or to hold Commission licenses or authorizations.
8. Compliance Officer. Within thirty (30) calendar days after the
Effective Date, FMIC shall designate a senior corporate manager with the
requisite corporate and organizational authority to serve as Compliance
Officer and to discharge the duties set forth below. The person designated
as the Compliance Officer shall be responsible for developing,
implementing, and administering the Compliance Plan and ensuring that FMIC
complies with the terms and conditions of the Compliance Plan and this
Consent Decree. In addition to general knowledge of the Communications
Laws necessary to discharge his/her duties under this Consent Decree, the
Compliance Officer shall have specific knowledge of the Equipment
Marketing Rules prior to assuming his/her duties.
9. Compliance Plan. For purposes of settling the matters set forth herein,
FMIC agrees that it shall within sixty (60) calendar days after the
Effective Date, develop and implement a Compliance Plan designed to ensure
future compliance with the Communications Laws and with the terms and
conditions of this Consent Decree. With respect to the Equipment Marketing
Rules, FMIC shall implement the following procedures:
a. Operating Procedures on Equipment Marketing. Within sixty (60)
calendar days after the Effective Date, FMIC shall establish
Operating Procedures that all Covered Employees must follow to help
ensure FMIC's compliance with the Equipment Marketing Rules. FMIC's
Operating Procedures shall include internal procedures and policies
specifically designed to ensure that (i) prior to the initiation of
marketing (as such term is defined in Section 2.803 of the Rules),
all Digital Devices and other radio frequency devices to be marketed
by FMIC comply with applicable technical standards, have been
properly authorized (via the certification, verification, or
declaration of conformity procedures, as applicable), and comply with
the applicable administrative requirements relating to equipment
labeling and consumer disclosure; and (ii) FMIC complies with the
requirements of Sections 2.1203, 2.1204 and 2.1205 of the Rules
relating to the importation and entry of Digital Devices into the
United States, including the filing with the United States Customs
and Border Protection of an FCC Form 740 (or the electronic
equivalent thereof) that accurately identifies the importation
condition(s) satisfied for each such importation.
b. Compliance Manual. Within sixty (60) calendar days after the
Effective Date, the Compliance Officer shall develop and distribute a
Compliance Manual to all Covered Employees. The Compliance Manual
shall explain the Equipment Marketing Rules, including the
obligations to secure an equipment authorization from the FCC prior
to marketing a Digital Device and to meet all FCC requirements for
the importation and entry of such Digital Device into the United
States, and set forth the Operating Procedures that Covered Employees
shall follow to help ensure FMIC's compliance with the Equipment
Marketing Rules. FMIC shall periodically review and revise the
Compliance Manual as necessary to ensure that the information set
forth therein remains current and complete. FMIC shall distribute any
revisions to the Compliance Manual promptly to all Covered Employees.
c. Compliance Training Program. FMIC shall establish and implement a
Compliance Training Program on compliance with the Equipment
Marketing Rules and the Operating Procedures. As part of the
Compliance Training Program, Covered Employees shall be advised of
FMIC's obligation to report any noncompliance with the Equipment
Marketing Rules under paragraph 10 of this Consent Decree and shall
be instructed on how to disclose noncompliance to the Compliance
Officer. All Covered Employees shall be trained pursuant to the
Compliance Training Program within sixty (60) calendar days after the
Effective Date, except that any person who becomes a Covered
Employee at any time after the Effective Date shall be trained within
thirty (30) calendar days after the date such person becomes a
Covered Employee. FMIC shall repeat the compliance training on an
annual basis, and shall periodically review and revise the Compliance
Training Program as necessary to ensure that it remains current and
complete and to enhance its effectiveness.
d. Training of Original Equipment Manufacturers.
i. In order to promote compliance with the Equipment Marketing Rules by
original equipment manufacturers (OEMs) that provide Digital Devices
for sale and use in the United States, but are located in foreign
countries, FMIC shall develop and implement an on-line compliance
training program (OEM Training Program) for all OEMs that manufacture
Digital Devices for and on behalf of FMIC for distribution by FMIC in
the United States under one or more FMIC brands (FMIC OEMs). The OEM
Training Program shall address compliance with the Equipment Marketing
Rules and the Operating Procedures relevant to the FMIC OEMs, and
shall incorporate FMIC's Compliance Manual. FMIC shall make the OEM
Training Program, including the Compliance Manual and any revisions
thereto, available to FMIC OEMs in English, Korean and Mandarin. FMIC
OEMs shall be trained pursuant to the OEM Training Program within one
hundred twenty (120) calendar days after the Effective Date. OEMs that
become FMIC OEMs at any time after the Effective Date shall be trained
pursuant to the OEM Training Program as soon as practicable but no
later than sixty (60) calendar days after becoming an FMIC OEM. FMIC
shall repeat the OEM training on an annual basis, tailored as
appropriate to the needs of the applicable FMIC OEM, and shall
periodically review and revise the OEM Training Program as necessary
to ensure that it remains current and complete and to enhance its
effectiveness.
(ii) FMIC shall notify the Bureau within ten (10) calendar days after the
date that FMIC has completed the initial OEM Training Program session(s)
in accordance with paragraph 9(d)(i) of this Consent Decree. Such
notification shall include a brief description of the training provided,
comply with Section 1.16 of the Rules, and be subscribed to as true under
penalty of perjury in substantially the form set forth therein. The
notification shall be submitted to the Chief, Spectrum Enforcement
Division, Enforcement Bureau, Federal Communications Commission, Room
3-C366, 445 12th Street, S.W., Washington, D.C. 20554, with a copy
submitted electronically to Linda M. Nagel at Linda.Nagel@fcc.gov and to
Ricardo Durham at Ricardo.Durham@fcc.gov.
10. Reporting Noncompliance. FMIC shall report any noncompliance with the
Equipment Marketing Rules and with the terms and conditions of this
Consent Decree within fifteen (15) calendar days after discovery of
such noncompliance. Such reports shall include a detailed explanation
of (i) each instance of noncompliance; (ii) the steps that FMIC has
taken or will take to remedy such noncompliance; (iii) the schedule on
which such remedial actions will be taken; and (iv) the steps that
FMIC has taken or will take to prevent the recurrence of any such
noncompliance. All reports of noncompliance shall be submitted to the
Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal
Communications Commission, Room 3-C366, 445 12th Street, S.W.,
Washington, D.C. 20554, with a copy submitted electronically to Linda
M. Nagel at Linda.Nagel@fcc.gov and to Ricardo Durham at
Ricardo.Durham@fcc.gov.
11. Compliance Reports. FMIC shall file Compliance Reports with the
Commission ninety (90) calendar days after the Effective Date, twelve
(12) months after the Effective Date, and twenty-four (24) months
after the Effective Date.
a. Each compliance report shall include a detailed description of FMIC's
efforts during the relevant period to comply with the terms and
conditions of this Consent Decree and the Equipment Marketing Rules.
In addition, each Compliance Report shall include a certification by
the Compliance Officer, as an agent of and on behalf of FMIC, stating
that the Compliance Officer has personal knowledge that FMIC (i) has
established and implemented the Compliance Plan; (ii) has completed
(or, in the case of the initial 90-day Compliance Report, is on
schedule to complete) the training of the FMIC OEMs as set forth in
paragraph 9(d)(i) of this Consent Decree; (iii) has utilized the
Operating Procedures since the implementation of the Compliance Plan;
and (iv) is not aware of any instances of noncompliance with the terms
and conditions of this Consent Decree, including the reporting
obligations set forth in paragraph 10 hereof.
b. The Compliance Officer's certification shall be accompanied by a
statement explaining the basis for such certification and must comply
with Section 1.16 of the Rules and be subscribed to as true under
penalty of perjury in substantially the form set forth therein.
c. If the Compliance Officer cannot provide the requisite certification,
the Compliance Officer, as an agent of and on behalf of FMIC, shall
provide the Commission with a detailed explanation of the reason(s)
why and describe fully (i) each instance of noncompliance; (ii) the
steps that FMIC has taken or will take to remedy such noncompliance,
including the schedule on which proposed remedial actions will be
taken; and (iii) the steps that FMIC has taken or will take to prevent
the recurrence of any such noncompliance, including the schedule on
which such preventive action will be taken.
d. All Compliance Reports shall be submitted to Chief, Spectrum
Enforcement Division, Enforcement Bureau, Federal Communications
Commission, Room 3-C366, 445 12th Street, S.W., Washington, D.C.
20554, with a copy submitted electronically to Linda M. Nagel at
Linda.Nagel@fcc.gov and to Ricardo Durham at Ricardo.Durham@fcc.gov.
12. Termination Date. Unless stated otherwise, the requirements set forth
in paragraphs 8 through 11 of this Consent Decree shall expire
twenty-four (24) months after the Effective Date.
13. Voluntary Contribution. FMIC agrees that it will make a voluntary
contribution to the United States Treasury in the amount of two
hundred sixty-five thousand dollars ($265,000) (Voluntary
Contribution), such Voluntary Contribution to be made in two equal
payments (each an Installment Payment) of one hundred thirty-two
thousand five hundred dollars ($132,500). The first Installment
Payment shall be made within thirty (30) calendar days after the
Effective Date, with the second Installment Payment to be made within
one hundred and eighty (180) calendar days after the Effective Date.
FMIC acknowledges and agrees that upon execution of this Consent
Decree the Voluntary Contribution and each Installment Payment shall
become a "Claim" or "Debt" as defined in 31 U.S.C. S: 3701(b)(1). Upon
an Event of Default, all procedures for collection as permitted by law
may, at the Commission's discretion, be initiated. In addition, FMIC
agrees that it will make the first and all subsequent Installment
Payments in United States Dollars without further demand or notice by
the dates specified above. FMIC shall also send electronic
notification of payment to Linda M. Nagel at Linda.Nagel@fcc.gov,
Ricardo Durham at Ricardo.Durham@fcc.gov., and Samantha Peoples at
Sam.Peoples@fcc.gov on the dates said payments are made.
14. Installment Payments must be made by check or similar instrument, wire
transfer, or credit card, and must include the NAL/Account number and
FRN referenced above. Regardless of the form of payment, a completed
FCC Form 159 (Remittance Advice) must be submitted. When completing
the FCC Form 159, enter the Account Number in block number 23A (call
sign/other ID) and enter the letters "FORF" in block number 24A
(payment type code). Below are additional instructions you should
follow based on the form of payment you select:
* Payment by check or money order must be made payable in United States
Dollars to the order of the Federal Communications Commission. Such
payments (along with the completed Form 159) must be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000,
or sent via overnight mail to U.S. Bank - Government Lockbox #979088,
SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO 63101.
* Payment by wire transfer must be made to ABA Number 021030004,
receiving bank TREAS/NYC, and Account Number 27000001. To complete
the wire transfer and ensure appropriate crediting of the wired funds,
a completed Form 159 must be faxed to U.S. Bank at (314) 418-4232 on
the same business day the wire transfer is initiated.
* Payment by credit card must be made by providing the required credit
card information on FCC Form 159 and signing and dating the Form 159
to authorize the credit card payment. The completed Form 159 must then
be mailed to Federal Communications Commission, P.O. Box 979088, St.
Louis, MO 63197-9000, or sent via overnight mail to U.S. Bank -
Government Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St.
Louis, MO 63101.
If you have questions regarding payment procedures, please contact the
Financial Operations Group Help Desk by phone, 1-877-480-3201, or by
e-mail, ARINQUIRIES@fcc.gov.
15. Event of Default. FMIC agrees that an Event of Default shall occur
upon the failure by FMIC to pay the full amount of any Installment
Payment on or before the due date specified in this Consent Decree.
16. Waivers. FMIC waives any and all rights it may have to seek
administrative or judicial reconsideration, review, appeal, or stay,
or to otherwise challenge or contest the validity of this Consent
Decree and the Adopting Order, provided the Bureau issues an Adopting
Order as defined herein. FMIC shall retain the right to challenge
Commission interpretation of the Consent Decree or any terms contained
herein. If either Party (or the United States on behalf of the
Commission) brings a judicial action to enforce the terms of the
Adopting Order, neither FMIC nor the Commission shall contest the
validity of the Consent Decree or the Adopting Order, and FMIC shall
waive any statutory right to a trial de novo. FMIC hereby agrees to
waive any claims it may have under the Equal Access to Justice Act
relating to the matters addressed in this Consent Decree.
17. Invalidity. In the event that this Consent Decree in its entirety is
rendered invalid by any court of competent jurisdiction, it shall
become null and void and may not be used in any manner in any legal
proceeding.
18. Subsequent Rule or Order. The Parties agree that if any provision of
the Consent Decree conflicts with any subsequent Rule or order adopted
by the Commission (except an order specifically intended to revise the
terms of this Consent Decree to which FMIC does not expressly consent)
that provision will be superseded by such Rule or Commission order.
19. Successors and Assigns. FMIC agrees that the provisions of this
Consent Decree shall be binding on its successors, assigns, and
transferees.
20. Final Settlement. The Parties agree and acknowledge that this Consent
Decree shall constitute a final settlement between the Parties with
respect to the Investigation. The Parties further agree that this
Consent Decree does not constitute either an adjudication on the
merits or a factual or legal finding or determination regarding any
compliance or noncompliance with the Communications Laws.
21. Modifications. This Consent Decree cannot be modified without the
advance written consent of both Parties.
22. Paragraph Headings. The headings of the paragraphs in this Consent
Decree are inserted for convenience only and are not intended to
affect the meaning or interpretation of this Consent Decree.
23. Authorized Representative. The individual signing this Consent Decree
on behalf of FMIC represents and warrants that he is authorized by
FMIC to execute this Consent Decree and to bind FMIC to the
obligations set forth herein. The FCC signatory represents that she is
signing this Consent Decree in her official capacity and that she is
authorized to execute this Consent Decree.
24. Counterparts. This Consent Decree may be signed in any number of
counterparts (including by facsimile), each of which, when executed
and delivered, shall be an original, and all of which counterparts
together shall constitute one and the same fully executed instrument.
________________________________
P. Michele Ellison
Chief
Enforcement Bureau
________________________________
Date
_______________________________
Mark Van Vleet
Chief Legal Officer
Fender Musical Instruments Corporation
______________________________
Date
47 U.S.C. S: 302a(b).
47 C.F.R. S:S: 2.803, 2.1203, 2.1204, 2.1205, 15.19, 15.21, 15.105.
Id. S: 15.3(k).
See 47 U.S.C. S: 302a(b).
47 C.F.R. S:S: 2.803, 2.1203, 2.1204, 2.1205, 15.19, 15.21, 15.105.
See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
FCC Enforcement Bureau, to William Mendello, CEO, Fender Musical
Instruments Corporation (June 1, 2010) (on file in EB-10-SE-055).
See 47 U.S.C. S: 302a(b).
See 47 C.F.R. S:S: 2.803, 15.19, 15.21, 15.105.
Id. S: 2.803(e)(4).
See id. S:S: 2.1203, 2.1204, 2.1205.
See id. S: 15.101.
See supra note 6.
See Letter from Charles A. Zielinski, Esq., Bryan Cave, Counsel for Fender
Musical Instruments Corporation, to Kathryn S. Berthot, Chief, Spectrum
Enforcement Division, FCC Enforcement Bureau (July 30, 2010) (on file in
EB-10-SE-055) (LOI Response). FMIC updated its LOI Response on September
29, 2010. See Letter from Charles A. Zielinski, Esq., Bryan Cave, Counsel
for Fender Musical Instruments Corporation, to Kathryn S. Berthot, Chief,
Spectrum Enforcement Division, FCC Enforcement Bureau (Sept. 29, 2010) (on
file in EB-10-SE-055).
See LOI Response at Spreadsheet A.
Id.
Id.
Id. at 4.
See Letter from Charles A. Zielinski, Esq., Bryan Cave, Counsel for Fender
Musical Instruments Corporation, to Linda M. Nagel, Esq., Spectrum
Enforcement Division, FCC Enforcement Bureau (Feb. 11, 2011) (on file in
EB-10-SE-055); Letter from Charles A. Zielinski, Esq., Bryan Cave, Counsel
for Fender Musical Instruments Corporation, to Linda M. Nagel, Esq.,
Spectrum Enforcement Division, FCC Enforcement Bureau (Nov. 18, 2011) (on
file in EB-10-SE-055); Letter from Charles A. Zielinski, Esq., Bryan Cave,
Counsel for Fender Musical Instruments Corporation, to John D. Poutasse,
Chief, Spectrum Enforcement Division, FCC Enforcement Bureau (July 13,
2012) (on file in EB-10-SE-055).
See, e.g., Tolling Agreement Extension, executed by and between John D.
Poutasse, Chief, Spectrum Enforcement Division, FCC Enforcement Bureau,
and Lee Holtry, Associate General Counsel, Fender Musical Instruments
Corporation (Apr. 17, 2012) (on file in EB-10-SE-055).
See supra para. 2.
See 47 C.F.R. S:S: 2.1203, 2.1204, 2.1205.
See 47 C.F.R. S: 1.16.
See id.
See Debt Collection Improvement Act of 1996, Pub. L. 104-134, 110 Stat.
1321, 1358 (Apr. 26, 1996).
An FCC Form 159 and detailed instructions for completing the form may be
obtained at http://www.fcc.gov/Forms/Form159/159.pdf.
Equal Access to Justice Act, Pub L. No. 96-481, 94 Stat. 2325 (1980)
(codified at 5 U.S.C. S: 504); see also 47 C.F.R. S:S: 1.1501-1.1530.
Federal Communications Commission DA 12-1270
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Federal Communications Commission DA 12-1270