b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nBureau of Consumer Protection\nDivision of Marketing Practices\n\nDecember 21, 2010\nAaron M. Lowe\nVice President, Government Affairs\nAutomotive Aftermarket Industry Association\n7101 Wisconsin Ave., Suite 1300\nBethesda, MD 20814\nPatricia Wirth\nPresident\nAutomotive Oil Change Association\n1701 N Greenville Ave., Suite 404\nRichardson, TX 75081\nPaul Fiore\nExecutive Vice President\nTire Industry Association\nService Station Dealers of America\n1532 Pinter Ridge Place Suite G\nBowie, Maryland 20716\nDear Mr. Lowe, Ms. Wirth, and Mr. Fiore:\nI am responding to concerns your organizations have raised regarding position statements\nissued by American Honda addressing warranties on parts that are not purchased from an\n\xe2\x80\x9cauthorized\xe2\x80\x9d Honda or Acura dealer and subsequent repair costs associated with failures due to\nthe use of such parts.1 As we mentioned, we take very seriously the concerns you raised and\nappreciate you bringing these issues to our attention. We are addressing your concerns as an\ninformal request for a staff advisory opinion. The opinions and conclusions expressed in the\nfollowing discussion are those of Commission staff only and are not attributable to, nor binding\non, the Commission itself or any individual Commissioner.\n\n1\n\nSpecifically, I am responding to the August 25 letter on behalf of the Automotive\nAftermarket Industry Association (\xe2\x80\x9cAAIA\xe2\x80\x9d), the letters of September 8 and October 26 on behalf\nof the Automotive Oil Change Association (\xe2\x80\x9cAOCA\xe2\x80\x9d), our meeting on October 26, and your\nmost recent letter on December 9 on behalf of AAIA, AOCA, and the Tire Industry\nAssociation/Service Station Dealers of America, collectively. Copies of American Honda\xe2\x80\x99s\nposition statements provided as part of these letters are attached hereto.\nPage 1 of 4\n\n\x0cThe Honda Position Statements and Alleged Tying Violations\nYour interpretation of American Honda\xe2\x80\x99s position statements is that these statements\nviolate the Magnuson-Moss Warranty Act\xe2\x80\x99s (\xe2\x80\x9cMagnuson-Moss\xe2\x80\x9d or \xe2\x80\x9cAct\xe2\x80\x9d) prohibition on tie-in\nsales. As you know, Section 102(c) of the Act prohibits warrantors from conditioning warranty\ncoverage on the consumer\xe2\x80\x99s using, in connection with the warranted product, an article or\nservice identified by brand, trade, or corporate name, unless the warrantor provides that article or\nservice without charge. In other words, warrantors may not claim that a warranty is void simply\nbecause a consumer has used an unauthorized or aftermarket part. In the same vein, no\nwarrantor may condition continued warranty coverage on a consumer using only a named or\nauthorized service station or dealership for their automobile maintenance. Simply stated, \xe2\x80\x9c[a]\nwarrantor cannot, as a matter of law, avoid liability under a written warranty where a defect is\nunrelated to the use by a consumer of \xe2\x80\x98unauthorized\xe2\x80\x99 articles or service.\xe2\x80\x9d2\nHowever, warrantors are permitted to exclude liability for damage or defects caused by\nthe use of unauthorized parts. The FTC\xe2\x80\x99s Interpretations under Magnuson-Moss explain:\nAlthough \xe2\x80\x9c[n]o warrantor may condition the continued validity of a warranty on the use of only\nauthorized repair service and/or authorized replacement parts for non-warranty service and\nmaintenance . . .[t]his does not preclude a warrantor from expressly excluding liability for\ndefects or damage caused by such \xe2\x80\x9cunauthorized\xe2\x80\x9d articles or service; nor does it preclude the\nwarrantor from denying liability where the warrantor can demonstrate that the defect or damage\nwas so caused.\xe2\x80\x9d3\nWhile we appreciate your view to the contrary, we interpret the American Honda position\nstatements to state that American Honda will not deny warranty coverage for the mere use of an\nunauthorized part, but rather for damage or defects caused by those parts. Indeed, in the position\nstatements, American Honda states that it \xe2\x80\x9cwill not be responsible for any subsequent repair\ncosts associated with vehicle or part failures caused by the use of parts other than [Honda/Acura]\nGenuine parts purchased from an authorized US [Honda/Acura] dealer.\xe2\x80\x9d4 The terms of the\nunderlying warranty contain similar provisions.5 In addition, we note that Honda\xe2\x80\x99s warranty\nterms specifically provide that \xe2\x80\x9cservice at the dealer is not mandatory for continued warranty\ncoverage.\xe2\x80\x9d6\nTherefore, based solely on Commission staff\xe2\x80\x99s review of the position statements and the\nunderlying warranty terms, American Honda does not appear to be in violation of the Act\xe2\x80\x99s tying\n\n2\n\n16 C.F.R. 700.10(c).\n\n3\n\nId. (emphasis added).\n\n4\n\nAmerican Honda Position Statement Issued August 20, 2010 (emphasis added).\n\n5\n\nHonda 2010 Warranty Booklet (Provided to FTC Staff), at 8 (stating that warranty does\nnot cover failures caused by installing accessories not authorized by Honda) (emphasis added).\n6\n\nId. at 36.\nPage 2 of 4\n\n\x0cprohibition. We would welcome any information that American Honda operates inconsistent\nwith its position statements or warranty terms and represents to consumers that their warranty is\nvoid simply because of the use of unauthorized parts or services. Moreover, should American\nHonda, or any other warrantor, attempt to deny warranty coverage by claiming that an\nunauthorized part caused the damage or defect for which the consumer seeks warranty service,\nthe burden will be on the warrantor to demonstrate that it was the unauthorized part that caused\nthat damage or defect.7\nThe Honda Position Statements and Perceived Misconceptions\nYou also raised concerns that Honda\xe2\x80\x99s position statements could be perceived as\nmisleading, and that there is a common misunderstanding by consumers regarding their warranty\nrights. Specifically, you contend that consumers are often misinformed about whether they can\nuse aftermarket parts or independent service stations without impacting their warranty coverage.\nTo address perceived confusion in this area and better inform consumers of their\nwarranty rights under the law, the FTC has issued new consumer education that specifically\naddresses this issue. This new consumer alert, entitled \xe2\x80\x9cAuto Warranties, Routine Maintenance,\nand Repairs: Is Using the Dealer a Must?,\xe2\x80\x9d explains in plain terms that it is \xe2\x80\x9cillegal for\nmanufacturers or dealers to claim that your warranty is void or to deny coverage under your\nwarranty simply because someone other than the dealer did the work.\xe2\x80\x9d8 The education piece also\naddresses the use of aftermarket parts, and sends a similar message: that it is \xe2\x80\x9cillegal for\ncompanies to void your warranty or deny coverage under the warranty simply because you used\nan aftermarket part.\xe2\x80\x9d Additionally, the new education piece encourages consumers to file a\ncomplaint with the FTC should they feel that a dealer denied their warranty claim unfairly. We\nencourage your organizations to link to this consumer education and to promote it broadly.\nFinally, we want to inform you that, in 2011, the FTC will engage in a regulatory review\nof the rules and guides issued under Magnuson-Moss.9 Of the rules to be reviewed is 16 C.F.R.\nPart 700, the FTC\xe2\x80\x99s Interpretations of certain provisions of Magnuson-Moss, including the tie-in\nsales prohibition. Periodic review of the agency\xe2\x80\x99s regulations is an important opportunity to\nassess the effectiveness, costs, and benefits of the rules and guides that the agency issues, and to\nprovide the public and associations such as yours with an opportunity to comment on them. We\nhope you will weigh in on the upcoming rule review proceedings, as may be appropriate.\nThe opinions and conclusions expressed in the foregoing discussion are those of\nCommission staff only and are not attributable to, nor binding on, the Commission itself\nor any individual Commissioner. The Commission reserves the right to take such further action\nas the public interest may require. Further, the staff will not be precluded from recommending\n7\n\nSee 16 C.F.R. 700.10(c) (warrantor is not precluded from denying liability where \xe2\x80\x9cthe\nwarrantor can demonstrate\xe2\x80\x9d the cause of damage or defect) (emphasis added).\n8\n\nSee http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt192.shtm.\n\n9\n\nSee 75 Fed. Reg. 12,715 (Mar. 17, 2010).\nPage 3 of 4\n\n\x0cto the Commission an appropriate action should other facts subsequently come to our attention.\nWe hope this discussion is helpful to you. Please continue to contact the Commission\nwhenever we may be of service.\n\nVery truly yours,\n\nLois C. Greisman\nAssociate Director\n\nPage 4 of 4\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nBureau of Competition\nHealth Care Division\n\nAugust 16, 2010\nRobert J. Walerius\n4400 Two Union Square\n601 Union Street\nSeattle, Washington 98101\nRe:\n\nYakima Valley Memorial Hospital Advisory Opinion\n\nDear Mr. Walerius:\nThis letter responds to your request on behalf of Yakima Valley Memorial Hospital\n(\xe2\x80\x9cMemorial\xe2\x80\x9d) for an advisory opinion concerning whether its proposal to sell discounted\npharmaceutical products to employees of two affiliates, Memorial Physicians, PLLC (\xe2\x80\x9cMP\xe2\x80\x9d) and\nValley Imaging (\xe2\x80\x9cValley\xe2\x80\x9d) would fall within the scope of the Non-Profit Institutions Act\n(NPIA). The NPIA exempts from the Robinson-Patman Act \xe2\x80\x9cpurchases of their supplies for\ntheir own use by schools, colleges, universities, public libraries, churches, hospitals, and\ncharitable institutions not operated for profit.\xe2\x80\x9d1 For the reasons explained below, and with the\nnoted caveats, we have concluded that Memorial\xe2\x80\x99s proposal would fall within the scope of the\nNPIA.\nFactual Background\nAs we understand the facts based on information you provided, Memorial is a Washington nonprofit corporation.2 It began as an acute care hospital, and, over time, to better meet the needs of\nthe population it serves, expanded the range of services it offers to include clinical care services.3\nIt currently operates an on-site pharmacy and offers NPIA-discounted pharmaceuticals to its\nemployees through the pharmacy. It now wants to extend the availability of the NPIA-\n\n1\n\n15 U.S.C. \xc2\xa7 13c.\n\n2\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\n(Oct. 8, 2009).\n3\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(June 4, 2010) (citing a desire to protect against potential physician shortages in its service area\nand a general trend among hospitals to function more as multipurpose health systems).\n\n\x0cYakima Valley Memorial Hospital Advisory Opinion\nAugust 16, 2010\nPage 2\ndiscounted pharmaceuticals to employees of two other affiliated entities: MP and Valley.\nSpecifically, Memorial proposes to use NPIA-discounted pharmaceuticals in connection with\nprescriptions filled for MP and Valley employees at Memorial\xe2\x80\x99s on-site pharmacy.4\nMP is a member-managed Washington professional limited liability company.5 It operates a\ngroup of Memorial-owned outpatient medical clinics, providing services such as human\nresources, billing, and information systems for those clinics.6 Memorial is MP\xe2\x80\x99s sole member.\nAs MP\xe2\x80\x99s sole member, Memorial owns 100 percent of MP and \xe2\x80\x9chas total control over all of\nMP\xe2\x80\x99s operations, officers, and employees.\xe2\x80\x9d7 For instance, Memorial manages and controls MP\xe2\x80\x99s\nbusiness affairs, appoints and removes MP officers, and makes decisions regarding MP\xe2\x80\x99s\nfinances.8 Furthermore, according to MP\xe2\x80\x99s Operating Agreement, MP at all times must \xe2\x80\x9c\xe2\x80\x98be\noperated in a manner consistent with and so as to preserve Memorial\xe2\x80\x99s 501(c)(3) tax exempt\nstatus under the Internal Revenue Code.\xe2\x80\x99\xe2\x80\x9d9\nValley is a Washington State corporation that has elected to be treated as a non-profit\ncorporation under Washington State law.10 In 2008, it received an Internal Revenue Service\n\n4\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\n(Oct. 8, 2009).\n5\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(Jan. 29, 2010).\n6\n\nMemorial is in the process of merging these clinics into MP to reduce Washington\nState tax liability and to streamline their operations. The mergers will have no effect on the\nclinics\xe2\x80\x99 ownership or relationship to Memorial. See Letter from Robert J. Walerius, Miller Nash\nLLP, to Ellen Connelly, FTC, at 5 (Mar. 30, 2010).\n7\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 4\n(Mar. 30, 2010). Despite the ownership relationship between MP and Memorial, MP\xe2\x80\x99s\nemployees are not covered by Memorial\xe2\x80\x99s health plan, because, after acquiring MP, Memorial\ndecided to allow the MP employees to retain their plans for their convenience. See id, at 4-5.\n8\n\nSee id, at 3 - 4.\n\n9\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(Jan. 29, 2010).\n10\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\n(Oct. 8, 2009).\n\n\x0cYakima Valley Memorial Hospital Advisory Opinion\nAugust 16, 2010\nPage 3\ndetermination letter confirming its status as a 501(c)(3) tax-exempt entity.11 It is a free-standing\noutpatient diagnostic imaging center that provides imaging services for Memorial\xe2\x80\x99s patients, and\nis geographically separate from Memorial. Valley does not operate under Memorial\xe2\x80\x99s hospital\nlicense or provider number, but Memorial is Valley\xe2\x80\x99s sole member.12 As Valley\xe2\x80\x99s sole member,\nMemorial has \xe2\x80\x9cthe exclusive right to control Valley by electing directors, authorizing the sale,\nlease, exchange of all or substantially all the property and assets of Valley, amending Valley\xe2\x80\x99s\nArticles of Incorporation and Bylaws, and voting on a merger or dissolution of the\ncorporation.\xe2\x80\x9d13 You have represented that Valley is operated \xe2\x80\x9cexclusively for the benefit of, to\nperform the functions of, and to carry out the purposes of Memorial.\xe2\x80\x9d14\nAnalysis\n1.\n\nMemorial\xe2\x80\x99s, MP\xe2\x80\x99s and Valley\xe2\x80\x99s Eligibility for the NPIA Exemption to the\nRobinson-Patman Act\n\nTo fall within the NPIA exemption to the Robinson-Patman Act, an organization must be an\n\xe2\x80\x9celigible entity\xe2\x80\x9d and must use the exemption to purchase supplies for its \xe2\x80\x9cown use.\xe2\x80\x9d15 Because\nthe NPIA is limited in its application to certain types of \xe2\x80\x9celigible entities,\xe2\x80\x9d we begin our analysis\nwith a discussion of Memorial\xe2\x80\x99s, Valley\xe2\x80\x99s, and MP\xe2\x80\x99s eligibility for the exemption. Among other\n\xe2\x80\x9celigible entities,\xe2\x80\x9d the NPIA exempts from the Robinson-Patman Act \xe2\x80\x9chospitals, and charitable\n\n11\n\nSee id.\n\n12\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3\n(Jan. 29, 2010). See also Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly,\nFTC, at 2 (Mar. 30, 2010). In your June 4, 2010 letter you clarified that apparent discrepancies\nbetween your representations relating to Memorial\xe2\x80\x99s membership in Valley and Valley\xe2\x80\x99s Articles\nof Incorporation were the result of Valley\xe2\x80\x99s change from a corporation to a non-profit. See\nLetter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3 (June 4, 2010).\n13\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 4\n(June 4, 2010). Only some of Valley\xe2\x80\x99s employees are covered by Memorial\xe2\x80\x99s health plan. As\nwith MP, this is the result of Valley\xe2\x80\x99s acquisition history. Prior to 2004, Valley was owned by\nMemorial and another hospital. In 2004, Memorial obtained complete ownership of Valley and\nfor their convenience, allowed Valley employees to keep their existing plan. See Letter from\nRobert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 5 (Mar. 30, 2010).\n14\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(Oct. 8, 2009).\n15\n\n425 U.S. 1 (1976).\n\n\x0cYakima Valley Memorial Hospital Advisory Opinion\nAugust 16, 2010\nPage 4\ninstitutions not operated for profit.\xe2\x80\x9d16 As you state in your letter, Memorial is a non-profit\nhospital.17 Thus, by the language of the statute, Memorial appears to be an entity eligible for the\nexemption, and indeed already uses the exemption with regard to its hospital employees.18\nSimilarly, Valley has elected to be treated as a non-profit corporation as permitted under\nWashington State law. As we understand from the materials you have provided, the Washington\nState Nonprofit Corporations Act (RCW 24.03) allows Washington corporations to elect nonprofit status without having to go through the expense and logistical complications of dissolving\nand reincorporating.19 We further understand from the information that you have provided that a\ncorporation making a non-profit election under Washington State law may only do so if it would\notherwise qualify for non-profit treatment. That is, Valley was able to make the election for\nnon-profit treatment because it would have met all of the requirements for incorporation as a\nnon-profit in the first instance.20 Furthermore, you have provided an Internal Revenue Service\ndetermination letter confirming Valley\xe2\x80\x99s classification as a public charity.21 Thus, Valley, as a\nnon-profit, charitable organization appears also to be an eligible entity under the NPIA and could\nitself qualify to use NPIA-discounted pharmaceuticals in accordance with the \xe2\x80\x9cown use\xe2\x80\x9d\nrequirement discussed below.\nMP, on the other hand, is not a non-profit corporation. It is a professional limited liability\ncompany (\xe2\x80\x9cPLLC\xe2\x80\x9d).22 You explain that MP must operate \xe2\x80\x9cin a manner consistent with and so as\n16\n\n15 U.S.C. \xc2\xa7 13c.\n\n17\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\n(Oct. 8, 2009).\n18\n\nSee id.\n\n19\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(Mar. 30, 2010).\n20\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(Jan. 29, 2010). See also RCW 24.04.017 (\xe2\x80\x9cAny corporation organized under any act of the state\nof Washington for any one or more of the purposes for which a corporation may be organized\nunder this chapter and for no purpose other than those permitted by this chapter, and to which\nthis chapter does not otherwise apply, may elect to have this chapter and the provisions thereof\napply to such corporation\xe2\x80\x9d).\n21\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at Tab\nC (Mar. 30, 2010).\n22\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(continued...)\n\n\x0cYakima Valley Memorial Hospital Advisory Opinion\nAugust 16, 2010\nPage 5\nto preserve Memorial\xe2\x80\x99s 501(c)(3) status,\xe2\x80\x9d23 but, in our view, that requirement alone is not\nsufficient to allow us to conclude that MP is itself a non-profit eligible for the NPIA exemption.\nMP\xe2\x80\x99s eligibility must depend on its association with, and relationship to, an eligible entity \xe2\x80\x93 in\nthis case Memorial.\n2.\n\nMemorial\xe2\x80\x99s Provision of NPIA-Discounted Pharmaceuticals to MP and Valley\nEmployees and the \xe2\x80\x9cOwn Use\xe2\x80\x9d Requirement\n\nAs we explained above, we conclude that both Memorial and Valley (but not MP) appear to be\neligible entities under the NPIA and thus each could use NPIA-discounted pharmaceuticals for\nits \xe2\x80\x9cown use.\xe2\x80\x9d As we understand the proposal, however, it is Memorial, through its on-site\npharmacy, that will provide the NPIA-discounted pharmaceuticals to the Valley and MP\nemployees.24 Thus, we base the rest of our analysis on whether this use by Memorial (as the\neligible entity) can properly be considered for Memorial\xe2\x80\x99s \xe2\x80\x9cown use.\xe2\x80\x9d\nThe principal authority on the meaning and scope of the \xe2\x80\x9cown use\xe2\x80\x9d test is Abbott Laboratories\nv. Portland Retail Druggists Association (Abbott Labs).25 In that case, retail pharmacies sued\npharmaceutical manufacturers under the Robinson-Patman Act, challenging the discounted sale\nof drugs to non-profit hospitals. The hospitals resold those drugs to patients in a number of\ndifferent situations. The Supreme Court held that the NPIA exemption is a limited one, and does\nnot give hospitals \xe2\x80\x9ca blank check\xe2\x80\x9d that applies to \xe2\x80\x9cwhatever new venture the hospital finds\nattractive.\xe2\x80\x9d26 Rather, the Court interpreted the \xe2\x80\x9cown use\xe2\x80\x9d test to shield only purchases that\n\xe2\x80\x9creasonably may be regarded as use by the hospital in the sense that such use is a part of and\npromotes the hospital\xe2\x80\x99s intended institutional operation in the care of persons who are its\n\n22\n\n(...continued)\n(Jan. 29, 2010).\n23\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 1\n(Oct. 8, 2009).\n24\n\nWe note that there may be a variety of ways for Valley, which itself appears to be an\neligible entity under the NPIA, to obtain the NPIA-discounted pharmaceuticals for its \xe2\x80\x9cown use.\xe2\x80\x9d\nFor instance, it would appear that as an eligible entity, Valley itself, independent of its affiliation\nwith Memorial, could purchase and distribute the NPIA-discounted pharmaceuticals to its\nemployees, or that Memorial could transfer NPIA-discounted pharmaceuticals to Valley for\nValley\xe2\x80\x99s \xe2\x80\x9cown use.\xe2\x80\x9d With this opinion, however, we only address the current proposal \xe2\x80\x93 to have\nMemorial extend the use of its NPIA-discounted pharmaceuticals to Valley\xe2\x80\x99s employees.\n25\n\n425 U.S. 1 (1976).\n\n26\n\nId., at 13.\n\n\x0cYakima Valley Memorial Hospital Advisory Opinion\nAugust 16, 2010\nPage 6\npatients.\xe2\x80\x9d27 The Court went on to determine that pharmaceuticals dispensed to certain categories\nof individuals, including hospital employees, would qualify for the hospital\xe2\x80\x99s own use. Hospital\nemployees were considered necessary for the hospital to carry out its intended institutional\nmission.28\nAs you explain, Memorial\xe2\x80\x99s mission is to improve the health of those it serves.29 It has operated\nas an acute care hospital. More recently, to continue to meet the changing needs of the\ncommunity it serves, and in response to changes in the health care industry, it has expanded the\nrange of health care services it offers to include clinical care.30 To this end, you explain that it\nhas acquired or formed entities such as MP and Valley,31 and depends on the services provided\nby MP and Valley to meet its goal of improving the health of its patients.32\nAs we understand from your letters, both MP and Valley operate for the express purpose of\nsupporting Memorial\xe2\x80\x99s aim of fully meeting the health care needs of the people it serves. Both\nMP and Valley are controlled by Memorial and operated exclusively for Memorial\xe2\x80\x99s benefit.\nAny profits earned by MP will be used to advance Memorial\xe2\x80\x99s charitable mission.33 Valley\xe2\x80\x99s\nsole purpose is to offer its imaging technology in support of Memorial.34\nWe conclude, based on the facts you have provided, that Memorial\xe2\x80\x99s central institutional\nfunction, within the meaning of Abbott Labs, is to deliver comprehensive health care services to\n\n27\n\nId., at 14 (emphasis in original).\n\n28\n\nId., at 16.\n\n29\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3\n(June 4, 2010).\n30\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3\n(Mar. 30, 2010).\n31\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(Jun. 4, 2010).\n32\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3\n(Jan. 29, 2010).\n33\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2- 3\n(Mar. 30, 2010).\n34\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 2\n(Oct. 8, 2009).\n\n\x0cYakima Valley Memorial Hospital Advisory Opinion\nAugust 16, 2010\nPage 7\nits patients.35 In furtherance of this mission, it acquired and operates MP and Valley. By virtue\nof its 100 percent ownership interest in MP and its status as sole member of Valley, Memorial\neffectively has ultimate control and decision-making authority over those entities.36 It is our\nview that Memorial\xe2\x80\x99s control over both MP and Valley effectively makes those entities part of\nMemorial to such a degree that one could treat Memorial, MP, and Valley as one unit. This\nconclusion is consistent with a number of prior staff advisory opinions.37 The employees of MP\nand Valley provide critical services to Memorial\xe2\x80\x99s patients, and these services are key to\nMemorial\xe2\x80\x99s ability to fulfill its intended institutional function of improving the health care of\nthose it serves.38 It thus appears to us to be consistent with both Abbott and prior advisory\nopinions to find that Memorial\xe2\x80\x99s provision of NPIA-discounted pharmaceuticals to employees of\nMP and Valley falls within the exemption.39\n\n35\n\nSee De Modena v. Kaiser Foundation Health Plan, Inc., 743 F.2d 1388, 1392-93 (9th\nCir. 1984) (discussing the changing nature of the health care industry and accepting a broad\ninstitutional function of providing \xe2\x80\x9ca complete panoply of health care\xe2\x80\x9d services).\n36\n\nSee Letter from Robert J. Walerius, Miller Nash LLP, to Ellen Connelly, FTC, at 3- 4\n(Mar. 30, 2010).\n37\n\nSee e.g. St. John\xe2\x80\x99s Health System (Sept. 2006) (staff opinion) (proper to treat the St.\nJohn\xe2\x80\x99s organization as a whole) (available at http://www.ftc.gov/bc/advisoryopinions/060913\nstjohnsadvisoryopinion.pdf); Valley Baptist Medical Center (Sept. 1996) (staff opinion) (\xe2\x80\x9cValley\nBaptist\xe2\x80\x99s provision of medical services through its [affiliated] family practice clinic would be\nconsidered simply an extension of the hospital\xe2\x80\x99s basic services beyond its four walls and into a\nsetting more accessible to the community and that therefore pharmaceuticals and other goods\npurchased for distribution as part of treatment provided by the Clinic would be purchased for\nValley Baptist\xe2\x80\x99s own use\xe2\x80\x9d) (available at http://www.ftc.gov/bc/adops/valleyba.shtm); William\nW. Backus Hospital (June 1996) (staff opinion) (treating the Backus organization as a whole)\n(available at http://www.ftc.gov/bc/adops/backusfn.shtm); Presentation Health System (Dec.\n1993) (Commission opinion) (proper to treat hospitals and long-term care facilities that are\nseparate corporate non-profit entities, but controlled by a single religious order, as a unit)\n(available at http://www.ftc.gov/bc/adops/010.shtm).\n38\n\nWe do not believe that, given the circumstances of Memorial\xe2\x80\x99s acquisition of MP and\nValley, and its desire to allow the employees of those entities to maintain continuity of care, the\nparticular health plan (Memorial or non-Memorial) to which the employees belong is\ndeterminative. The important points are that they appear to be properly considered employees of\nthe Memorial system and that they enable Memorial to carry out its intended institutional\nfunction.\n39\n\nSee 425 U.S. 1, 16 (1976); Connecticut Hospital Association (Dec. 2001) (staff\n(continued...)\n\n\x0cYakima Valley Memorial Hospital Advisory Opinion\nAugust 16, 2010\nPage 8\nWe emphasize, however, that the NPIA exemption is dependent on Memorial ensuring that no\nineligible entity benefits from the exemption. MP itself does not appear to be independently\neligible for the exemption, and our opinion is based on your assurance that any financial benefit\nfrom the proposal ultimately will accrue to Memorial by virtue of Memorial\xe2\x80\x99s relationship with\nMP.\nConclusion\nAs discussed above, and with the noted caveats, we conclude that Memorial\xe2\x80\x99s proposal to extend\nthe sales of discounted pharmaceuticals to employees of two affiliated entities \xe2\x80\x93 MP and Valley\n\xe2\x80\x93 appears to fall within the NPIA exemption to the Robinson-Patman Act.\nThis letter sets out the views of the staff of the Bureau of Competition, as authorized by the\nCommission\xe2\x80\x99s Rules of Practice. Under Commission Rule \xc2\xa7 1.3(c), 16 C.F.R. \xc2\xa7 1.3(c), the\nCommission is not bound by this staff opinion and reserves the right to rescind it at a later time.\nIn addition, this office retains the right to reconsider the questions involved and, with notice to\nthe requesting party, to rescind or revoke the opinion if implementation of the proposed program\nresults in substantial anticompetitive effects, if the program is used for improper purposes, if\nfacts change significantly, or if it otherwise would be in the public interest to do so.\nSincerely,\n\nMarkus H. Meier\nAssistant Director\n\n39\n\n(...continued)\nopinion) (available at http://www.ftc.gov/opa/2001/12/chaadvisopinionletter.shtm); BJC Health\nSystem (Nov. 1999) (staff opinion) (treating BJCHS and its affiliates as part of one unit and\nfinding that \xe2\x80\x9cBJCHS\xe2\x80\x99 employees, as a group, like the hospital employees in Abbott Labs, are\ndirectly related to the accomplishment of their employer\xe2\x80\x99s core functions\xe2\x80\x9d) (available at\nhttp://www.ftc.gov/bc/adops/bjclet.shtm).\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\nCraig Tregillus\nctregillus@ftc.gov\n\nDirect Dial: (202) 326-2970\nFacsimile: (202) 326-3395\n\nMay 14, 2010\n\nMr. Carlos E. Rodriguez, President\nCelestium Crematory\nP.O. Box 9086\nPlaza Carolina Station\nCarolina, Puerto Rico 00988-9086\nDear Mr. Rodriguez:\nYou have asked for confirmation of your understanding that the Commission\xe2\x80\x99s Funeral\nRule applies to funeral providers in Puerto Rico. Your request was prompted by a recent hearing\nexamining funeral home practices in the Commonwealth House of Representatives where some\nlegislators expressed their belief that the Rule is inapplicable in Puerto Rico, giving funeral\nproviders there the impression they need not comply. You are correct, of course, that the Rule\ndoes apply to funeral providers in Puerto Rico, as a brief review of the history of the relationship\nbetween the United States and Puerto Rico shows.\nA Presidential task force has recounted that history,1 but it is useful to summarize it here.\nPuerto Rico was ceded to the United States by Spain in 1898 pursuant to the Treaty of Paris,\nwhich ended the Spanish-American war.2 After two years under a military governor, Congress\nin 1900 established a civilian government for Puerto Rico.3 In 1917, Congress established the\nisland as an \xe2\x80\x9corganized but unincorporated\xe2\x80\x9d territory and granted U.S. citizenship to Puerto\nRicans.4 In 1952, pursuant to the Puerto Rican Federal Relations Act,5 a referendum vote by the\npeople of Puerto Rico approved a new constitution, also approved by Congress later that year,\n\n1\n\nREPORT BY THE PRESIDENT\xe2\x80\x99S TASK FORCE ON PUERTO RICO\xe2\x80\x99S STATUS (Dec. 2007)(\xe2\x80\x9cTask\nForce Report\xe2\x80\x9d), available at http://www.justice.gov/opa/documents/2007-report-by-thepresident-task-force-on-puerto-rico-status.pdf.\n2\n\nId. at 3.\n\n3\n\nId.\n\n4\n\nId.\n\n5\n\nPub. L. 600.\n\n\x0cMr. Carlos E. Rodriguez\nPage 2 of 3\nwhich established the present-day Commonwealth of Puerto Rico.6 In four subsequent\nplebiscites, Puerto Ricans have declined to alter that status in favor of becoming a state or an\nindependent sovereign nation.7\nThe U.S. Constitution provides that \xe2\x80\x9c[t]he Congress shall have power to dispose of and\nmake all needful rules and regulations respecting the territory or other property belonging to the\nUnited States.\xe2\x80\x9d8 The Department of Justice accordingly affirmed Puerto Rico\xe2\x80\x99s territorial status\nin 1959, several years after the creation of the Commonwealth,9 as has the Supreme Court.10\nThus, Puerto Rico is a \xe2\x80\x9cterritory\xe2\x80\x9d of the United States.\nSection 5 of the Federal Trade Commission Act (\xe2\x80\x9cFTC Act\xe2\x80\x9d) prohibits \xe2\x80\x9cunfair or\ndeceptive acts or practices in or affecting commerce.\xe2\x80\x9d11 Section 4 of the FTC Act defines\n\xe2\x80\x9ccommerce\xe2\x80\x9d as follows:\nCommerce means commerce among the several states or with foreign\nnations, or in any territory of the United States or in the District of Columbia, or\nbetween any such territory and another, or between any such territory and any\nstate or foreign nation, or between the District of Columbia and any state or\nterritory or foreign nation.12\nThe Commission\xe2\x80\x99s Funeral Rule was issued in 1982 pursuant to Section 18(a)(1) of the\nFTC Act,13 which mandates, in pertinent part, that any such rule \xe2\x80\x9cdefine with specificity acts or\npractices which are unfair or deceptive acts or practices in or affecting commerce (within the\nmeaning of such section 5(a)(1)).\xe2\x80\x9d14 Consequently, the Funeral Rule has the same jurisdictional\nreach over unfair or deceptive acts or practices as Section 5 of the FTC Act, which reaches\ncommerce \xe2\x80\x9cin any territory of the United States.\xe2\x80\x9d Because Puerto Rico remains a U.S.\n\xe2\x80\x9cterritory,\xe2\x80\x9d the Funeral Rule applies to funeral providers in Puerto Rico.\n\n6\n\nTask Force Report at 3.\n\n7\n\nId. at 3-4.\n\n8\n\nArt. IV, \xc2\xa7 3, cl. 2.\n\n9\n\nTask Force Report at 5; see note 4 supra, and accompanying text.\n\n10\n\nSee, e.g., Harris v. Rosario, 446 U.S. 651 (1980).\n\n11\n\n15 U.S.C. \xc2\xa7 45(a)(1).\n\n12\n\n15 U.S.C. \xc2\xa7 44 (emphasis added).\n\n13\n\n47 Fed. Reg. 42260, 42263 (Sept. 24, 1982)\n\n14\n\n15 U.S.C. \xc2\xa7 57a(a)(1)(B) (emphasis added).\n\n\x0cMr. Carlos E. Rodriguez\nPage 3 of 3\nI am enclosing copies in English and Spanish of the Compliance Guide to the Funeral\nRule. The Guide is also available on the FTC\xe2\x80\x99s website in English at http://www.ftc.gov/bcp/\nedu/pubs/business/adv/bus05.pdf and in Spanish at http://www.ftc.gov/bcp/edu/pubs/business/\nadv/sbus05.pdf.\nPlease be advised that the views expressed in this letter are those of the FTC staff. They\nhave not been reviewed, approved, or adopted by the Commission, and they are not binding upon\nthe Commission. However, they do reflect the opinions of those staff members charged with\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\nwebsite at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n\x0c'


b'UNITED STATES OF AMERICA\n\nFEDERAL TRADE COMMISSION\nWASHINGTON, D.C. 20580\n\nDivision of Marketing Practices\n~\nCraig Tregillus\nctregillus@ftc.gov\n\nTel\xc3\xa9fono Directo: (202) 326-2970\nFacs\xc3\xadmile: (202) 326-3395\n\n14 de mayo de 2010\n\nSr. Carlos E. Rodr\xc3\xadguez\nPresidente de Celestium Crematory\nP.O. Box 9086\nPlaza Carolina Station\nCarolina, Puerto Rico 00988-9086\nEstimado Sr. Rodr\xc3\xadguez:\nUsted a solicitado confirmaci\xc3\xb3n respecto de su opini\xc3\xb3n que sostiene que la Regla de\nFunerales de la Comisi\xc3\xb3n Federal de Comercio (FTC) se aplica a los proveedores de bienes y\nservicios f\xc3\xbanebres de Puerto Rico. Su consulta fue motivada por una audiencia que se llev\xc3\xb3 a\ncabo recientemente en la C\xc3\xa1mara de Representantes del Estado Libre Asociado de Puerto Rico\ncon el fin de examinar las pr\xc3\xa1cticas de las funerarias. Durante dicha audiencia, algunos\nlegisladores expresaron su opini\xc3\xb3n manifestando que la Regla de Funerales es inaplicable en\nPuerto Rico, lo cual les dio la impresi\xc3\xb3n a los proveedores locales de este sector que no es\nnecesario que cumplan con sus disposiciones. Por supuesto que usted tiene raz\xc3\xb3n, y tal como se\ndesprende de una breve revisi\xc3\xb3n de la historia de la relaci\xc3\xb3n entre Estados Unidos y Puerto Rico,\nefectivamente, la Regla se aplica a los proveedores de bienes y servicios f\xc3\xbanebres establecidos\nen Puerto Rico.\nUn grupo de trabajo encomendado por el Presidente ha recopilado esa historia,1 pero\ncreemos que es oportuno resumirla en la presente carta. En 1898, conforme a los t\xc3\xa9rminos del\nTratado de Par\xc3\xads que dio por finalizada la guerra entre Espa\xc3\xb1a y Estados Unidos2, Puerto Rico\nfue cedido a Estados Unidos por Espa\xc3\xb1a. En 1900, despu\xc3\xa9s de dos a\xc3\xb1os de administraci\xc3\xb3n de un\ngobernador militar, el Congreso estableci\xc3\xb3 un gobierno civil para Puerto Rico.3 En 1917, el\nCongreso estableci\xc3\xb3 el estatus de la isla defini\xc3\xa9ndolo como un territorio \xe2\x80\x9corganizado pero\nincorporado\xe2\x80\x9d y les otorg\xc3\xb3 la ciudadan\xc3\xada estadounidense a los puertorrique\xc3\xb1os.4 En 1952, de\nconformidad a la Ley de Relaciones Federales de Puerto Rico,5 se llev\xc3\xb3 a cabo un refer\xc3\xa9ndum y\nel pueblo de Puerto Rico vot\xc3\xb3 la aprobaci\xc3\xb3n de una nueva constituci\xc3\xb3n, que fue aprobada ese\nmismo a\xc3\xb1o por el Congreso y que constituy\xc3\xb3 el Estado Libre Asociado de Puerto Rico actual.6\n1\n\nINFORME DEL GRUPO DE TRABAJO DEL PRESIDENTE SOBRE EL ESTATUS DE PUERTO RICO\n(Diciembre de 2007)(\xe2\x80\x9cTask Force Report\xe2\x80\x9d), disponible en http://www.justice.gov/opa/documents/2007-report-bythe-president-task-force-on-puerto-rico-status.pdf.\n2\n\xc3\x8ddem, 3.\n3\n\xc3\x8ddem.\n4\n\xc3\x8ddem.\n5\nPub. L. 600.\n6\nInforme del Grupo de Trabajo, 3.\n\n\x0cSr. Carlos E. Rodr\xc3\xadguez\n\nP\xc3\xa1gina 2 de 3\n\nEn cuatro plebiscitos subsiguientes, los puertorrique\xc3\xb1os manifestaron por medio de su voto que\nno deseaban alterar ese estatus para convertirse en un estado o en una naci\xc3\xb3n soberana\nindependiente.7\nLa Constituci\xc3\xb3n de los Estados Unidos de Am\xc3\xa9rica dispone que \xe2\x80\x9c[e]l Congreso tendr\xc3\xa1 la\nfacultad de disponer y efectuar todas las reglas y regulaciones necesarias en lo que respecta al\nterritorio u otra propiedad perteneciente a Estados Unidos.\xe2\x80\x9d8 En el mismo sentido, en 1959,\nvarios a\xc3\xb1os despu\xc3\xa9s de la creaci\xc3\xb3n del Estado Libre Asociado,9 el Departamento de Justicia\nafirm\xc3\xb3 el estatus territorial de Puerto Rico, que tambi\xc3\xa9n fue ratificado por la Corte Suprema.10\nPor lo tanto, Puerto Rico es un \xe2\x80\x9cterritorio\xe2\x80\x9d de Estados Unidos.\nLa Secci\xc3\xb3n 5 de la Ley de la Comisi\xc3\xb3n Federal de Comercio Federal (\xe2\x80\x9cFTC Act\xe2\x80\x9d) proh\xc3\xadbe\n\xe2\x80\x9clas pr\xc3\xa1cticas o actos desleales o enga\xc3\xb1osos en el comercio o en aquello que afecte al\ncomercio.\xe2\x80\x9d11 La Secci\xc3\xb3n 4 de la Ley de la FTC define el t\xc3\xa9rmino \xe2\x80\x9ccomercio\xe2\x80\x9d de la siguiente\nmanera:\nComercio significa el comercio entre varios estados o con pa\xc3\xadses extranjeros, o en\ncualquier territorio de Estados Unidos o en el Distrito de Columbia, o entre cualquiera\nde estos territorios y otro, o entre cualquiera de estos territorios y cualquier estado o\npa\xc3\xads extranjero, o entre el Distrito de Columbia y cualquier estado o territorio o pa\xc3\xads\nextranjero.12\nLa Regla de Funerales de la Comisi\xc3\xb3n Federal de Comercio fue dictada en 1982 conforme a\nlo dispuesto en la Secci\xc3\xb3n 18(a)(1) de la Ley de la FTC,13 la cual ordena en la parte pertinente,\nque tal regla \xe2\x80\x9cdefine con especificidad las pr\xc3\xa1cticas o actos considerados pr\xc3\xa1cticas o actos\ndesleales o enga\xc3\xb1osos en el comercio o en aquello que afecte al comercio (dentro del\nsignificado de dicha secci\xc3\xb3n 5(a)(1)).\xe2\x80\x9d14 En consecuencia, la Regla de Funerales posee el mismo\nalcance jurisdiccional sobre las pr\xc3\xa1cticas o actos desleales o enga\xc3\xb1osos que la Secci\xc3\xb3n 5 de la\nLey de la FTC cuya aplicabilidad tiene alcance sobre el comercio ejercido \xe2\x80\x9cen cualquier\nterritorio de Estados Unidos.\xe2\x80\x9d Debido a que Puerto Rico contin\xc3\xbaa siendo un \xe2\x80\x9cterritorio\xe2\x80\x9d de\nEstados Unidos, la Regla de Funerales se aplica a los proveedores de bienes y servicios f\xc3\xbanebres\nde Puerto Rico.\nSe adjuntan copias en ingl\xc3\xa9s y en espa\xc3\xb1ol de la gu\xc3\xada C\xc3\xb3mo Cumplir con la Regla de\nFunerales. Esta gu\xc3\xada tambi\xc3\xa9n est\xc3\xa1 disponible en el sitio Web de la FTC en ingl\xc3\xa9s en\nhttp://www.ftc.gov/bcp/ edu/pubs/business/adv/bus05.pdf y en espa\xc3\xb1ol en http://www.ftc.gov\n/bcp/edu/pubs/business/ adv/sbus05.pdf.\n\n7\n8\n9\n10\n11\n12\n13\n14\n\n\xc3\x8ddem, 3-4.\nArt. IV, \xc2\xa7 3, cl. 2.\nInforme del Grupo de Trabajo 5; v\xc3\xa9ase nota 4 supra y texto que acompa\xc3\xb1a a la nota.\nV\xc3\xa9ase, vg., Harris vs. Rosario, 446 U.S. 651 (1980).\n15 U.S.C. \xc2\xa7 45(a)(1).\n15 U.S.C. \xc2\xa7 44 (destacado).\n47 Fed. Reg. 42260, 42263 (24 de septiembre de 1982)\n15 U.S.C. \xc2\xa7 57a(a)(1)(B) (destacado).\n\n\x0cSr. Carlos E. Rodr\xc3\xadguez\n\nP\xc3\xa1gina 3 de 3\n\nPor favor, tenga presente que los puntos de vista expresados en la presente carta pertenecen\nal personal de la FTC. Estas opiniones no han sido revisadas, aprobadas ni adoptadas por la\nComisi\xc3\xb3n, y no son de car\xc3\xa1cter vinculante para la FTC. Sin embargo, el contenido de la presente\ncarta refleja las opiniones de los miembros del personal de la FTC que est\xc3\xa1 a cargo de la\naplicaci\xc3\xb3n de la Regla de Funerales. Las opiniones del personal a cargo de la Regla de Funerales\nse publican rutinariamente en el sitio Web de la FTC en http://www.ftc.gov/bcp/conline/edcams\n/funerals/staffopinions.shtm.\n\nAtentamente,\n/s/\nCraig Tregillus\nCoordinador de la Regla de Funerales\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\nCraig Tregillus\nctregillus@ ftc.gov\n\nD irect D ial: (202) 326-2970\nFacsim ile: (202) 326-3395\n\nApril 19, 2010\n\nMs. Margie Heckman\nUniversal Casket Co.\nP.O. Box 107\nBellbrook, OH 45305\nDear Ms. Heckman:\nYou have requested staff\xe2\x80\x99s views on whether the Funeral Rule prohibits a number of\npractices by funeral providers that you allege Universal Casket has encountered when attempting\ndeliveries of third-party caskets purchased by consumers from Costco.\nAs you know, section 453.4(b)(1) prohibits a funeral provider from \xe2\x80\x9ctying\xe2\x80\x9d or\nconditioning the purchase of any funeral good or service to the purchase of another funeral good\nor service from the provider.1 Prior staff opinion letters have stated staff\xe2\x80\x99s opinion that practices\nby funeral providers \xe2\x80\x9c\xe2\x80\x98unreasonably\xe2\x80\x99 burdening a consumer\xe2\x80\x99s choice to purchase an item from a\nthird party\xe2\x80\x9d violate \xc2\xa7 453.4(b)(1) of the Rule.2 Thus, we have previously stated that it is a\nviolation of \xc2\xa7 453.4(b)(1) for a funeral provider to:\n!\n\nRequire a consumer\xe2\x80\x99s presence at a funeral home at the time of delivery of a third-party\ncasket;3\n\n!\n\nRefuse to sign an acknowledgment of delivery of a third-party casket in the consumer\xe2\x80\x99s\nabsence;4\n1\n\n16 C.F.R. \xc2\xa7 453.4(b)(1).\n\n2\n\nStaff Opinion 07-3 (Mar. 21, 2007) at p. 1-2, available at http://www.ftc.gov/\nbcp/conline/ edcams/funerals/opinions/opinion07-3.pdf; see also, Staff Opinion 04-1 (May 12,\n2004), available at http://www.ftc.gov/bcp/conline/edcams/funerals/opinions/opinion04-1.pdf\n3\n\n4\n\nStaff Opinion 07-3; Staff Opinion 04-1.\n\nStaff Opinion 07-3; Staff Opinion 04-2 (June 22, 2004) available at\nhttp://www.ftc.gov/ bcp /conline/edcams/funerals/opinions/opinion04-2.pdf.\n\n\x0cMs. Margie Heckman\nPage 2 of 3\n!\n\nCharge a fee for storage of a third-party casket delivered in advance of an at-need\ndisposition;5 and\n\n!\n\nCharge a fee for disposal of the container or packaging in which a third-party casket is\nshipped.6\n\nIt continues to be staff\xe2\x80\x99s opinion that practices that \xe2\x80\x9cunreasonably burden a consumer\xe2\x80\x99s\nchoice to purchase an item from a third party\xe2\x80\x9d violate \xc2\xa7 453.4(b)(1) of the Rule. Restrictions by\na funeral provider that unreasonably impede the delivery of a third-party casket create an\nunreasonable burden on a consumer\xe2\x80\x99s right to use such a casket, in violation of \xc2\xa7 453.4(b)(1).\nAs a general rule, a funeral provider should avoid acts or practices that treat third-party casket\nretailers differently from the provider\xe2\x80\x99s regular casket supplier. It is staff\xe2\x80\x99s opinion that the\nfollowing acts or practices would violate \xc2\xa7 453.4(b)(1), if applied exclusively to third-party\ncasket retailers that contact a funeral provider in advance to arrange delivery:\n!\n\nRefusal to accept delivery of a third-party casket more than a specified number of days in\nadvance of its use;\n\n!\n\nRefusal to accept delivery of a third-party casket less than a specified number of days in\nadvance of its use;\n\n!\n\nRefusal to accept delivery of a third-party casket during regular business hours except by\nprior appointment;7 and\n\n!\n\nRefusal to accept delivery of a third-party casket during regular business hours at a\nparticular date and time, unless the provider is unable to receive caskets from any\nsupplier at that date and time (e.g., because the provider will be conducting a funeral).\n\nYou also ask whether funeral providers \xe2\x80\x9cunreasonably burden a consumer\xe2\x80\x99s choice\xe2\x80\x9d if\nthey decline to assist in the delivery of a third-party casket by helping the delivery person unload\nand unpackage the casket, and by withholding standard equipment for wheeling the casket from\n5\n\nStaff Opinion 07-4 (July 12, 2007), available at http://www.ftc.gov/bcp/\nconline/edcams/funerals/opinions/opinion07-4.pdf; Staff Opinion 07-8 (Aug. 21, 2007),\navailable at http://www.ftc.gov/bcp/conline /edcams/funerals/opinions/opinion07-8.pdf.\n6\n\nStaff Opinion 07-4. Although funeral providers may not charge consumers a fee\nfor disposal of the packaging, nothing in the Rule prevents a funeral provider from requiring, on\na non-discriminatory basis, that all of its casket suppliers take any casket packaging with them\nand dispose of it themselves after a delivery.\n7\n\nAs your inquiry notes, there are some small funeral homes that are not open\nduring regular business hours of 8:00 a.m. to 5:00 p.m. (e.g., because the sole proprietor is\nemployed elsewhere), and thus may not be able to receive caskets from any supplier during some\nof those hours except by prior appointment.\n\n\x0cMs. Margie Heckman\nPage 3 of 3\nthe delivery truck into the building. While a funeral provider cannot impose restrictions that\nunreasonably impede a third-party provider\xe2\x80\x99s ability to deliver a casket to the funeral home, staff\nis not prepared to say that the Rule affirmatively requires a funeral provider to pay the labor cost\nassociated with unloading a third-party casket and removing its packaging, particularly when\nsmall funeral providers may not have personnel who are physically capable of assisting in\nunloading a heavy and cumbersome casket.\nOn the other hand, withholding the use of a funeral provider\xe2\x80\x99s standard equipment, such\nas a utility \xe2\x80\x9cchurch truck\xe2\x80\x9d to assist in bringing the casket into the funeral home would impose an\nunreasonable impediment to the delivery of a third-party casket. Indeed, such equipment is part\nof the funeral provider\xe2\x80\x99s overhead costs, which are charged to and paid by consumers in the form\nof the funeral provider\xe2\x80\x99s non-declinable basic services fee. It is an unreasonable burden to deny\nconsumers the benefits of equipment for which they must pay simply because they have\nexercised their right to purchase a casket from a third party.\nFinally, your inquiry asks whether it is a violation of the Rule for a funeral provider to\ndisparage the quality of third-party caskets or mislead consumers about the savings available\nfrom package pricing discounts. A primary purpose of the Rule, and of the price disclosures it\nrequires, is to prevent price and savings misrepresentations by assuring that consumers receive\naccurate price information. Although disparagement of a competitor\xe2\x80\x99s products is not prohibited\nby the Funeral Rule, material representations that are false, misleading or deceptive may violate\nSection 5 of the Federal Trade Commission Act,8 and expose a funeral provider to an FTC law\nenforcement action.\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\non the FTC website at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n8\n\n15 U.S.C. \xc2\xa7 45 .\n\n\x0c'


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b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\n\nFebruary 4, 2010\nJean L. Kiddoo\nBingham McCutchen LLP\n2020 K Street, N.W.\nWashington, DC 20006-1806\nRequest for Advisory Opinion:\nPrerecorded Message to Customers Regarding\nAvailability of Free Services for a Limited Time Period\nDear Ms. Kiddoo:\nYou have requested an informal staff opinion that telephone calls which deliver\nprerecorded messages to existing customers of your client, RCN, a cable and open video services\nprovider, do not meet the definition of \xe2\x80\x9ctelemarketing\xe2\x80\x9d in the Telemarketing Sales Rule, 16\nC.F.R. \xc2\xa7 310.2(cc). The telephone calls at issue deliver prerecorded messages that notify RCN\ncustomers of the existence and availability of a specific programming channel, and the fact that\nthe channel will be available for free for a certain time period.\nRCN provides cable and open video services in Boston, Chicago, Lehigh Valley and\nsuburban Philadelphia, Pennsylvania, New York City, and Washington, D.C. RCN expanded its\nforeign language offerings in 2008, and now offers channels that provide programming in 15\ndifferent languages. RCN has used telephone calls delivering prerecorded messages\n(\xe2\x80\x9crobocalls\xe2\x80\x9d) to notify its customers about the existence of programming offerings or changes to\nchannel line-ups. RCN has found that the use of foreign language speakers to conduct live-calls\nto subscribers to inform them of RCN\xe2\x80\x99s offerings is \xe2\x80\x9ccost prohibitive\xe2\x80\x9d because of the large\nnumber of different language channels offered by RCN and the relatively few international\ncustomers in each language.\nRCN would like to place telephone calls delivering prerecorded messages to notify\ncurrent subscribers about its expanded foreign-language channels. The messages would notify\nthe subscribers that a specific foreign-language network that is not available on the subscribers\xe2\x80\x99\ncurrent tiers of service is available for viewing temporarily at no additional charge. As an\nexample, your letter describes the following proposed telephone calls:\n[A] robocall in Japanese would be sent to RCN\xe2\x80\x99s Chicago customers to inform\nthem that the TV Japan network is available on Channel 504 without cost for the\nnext 30 days. This type of robocall does not provide any information about how\nto subscribe to the channel after the 30-day period or the price of the channel, or\n\n\x0cJean L. Kiddoo\nBingham McCutchen LLP\nRequest for Advisory Opinion\n\nFebruary 4, 2010\nPage 2\n\nin any way \xe2\x80\x9cinduce them to purchase any goods or services,\xe2\x80\x9d but instead simply\ninforms and educates the existing customer about the current availability of a\nprogramming service and the time period during which the customer may freely\naccess the channel. The customer is then able to enjoy the free programming\nwithout obligation, payment or any further requirements whatsoever. Information\nabout how to continue receiving the channel after the free preview ends would not\nbe provided in the robocall message and would only be available when the\nprogramming is watched by the subscriber.\nThe staff of the Federal Trade Commission has concluded that the telephone calls\ndescribed in your letter are calls made in connection with \xe2\x80\x9ctelemarketing\xe2\x80\x9d within the meaning of\nthe TSR because the calls are part of a campaign to induce the sale of services to the recipients\nof the calls. Consequently, 16 C.F.R. \xc2\xa7 310.4(b)(1)(v)(A) prohibits outbound telephone calls to\ndeliver such messages unless the seller has obtained from the recipient of the call an express\nagreement, in writing, that evidences the willingness of the recipient of the call to receive calls\nthat deliver prerecorded messages by or on behalf of that seller and includes such person\xe2\x80\x99s\ntelephone number and signature.\nThe Telemarketing and Consumer Fraud and Abuse Prevention Act defines\n\xe2\x80\x9ctelemarketing,\xe2\x80\x9d in relevant part, as \xe2\x80\x9ca plan, program, or campaign which is conducted to induce\npurchases of goods or services . . . by use of one or more telephones and which involves more\nthan one interstate telephone call.\xe2\x80\x9d 15 U.S.C. \xc2\xa7 6106(4). The Commission has adopted a\nvirtually identical definition in the TSR. Id. \xc2\xa7 310.2(cc); Prohibition of Deceptive and Abusive\nTelemarketing Acts, Final Rule, 60 Fed. Reg. 43,842, 43,844 (1995). Consequently,\n\xe2\x80\x9ctelemarketing\xe2\x80\x9d under the statute and its implementing regulations is not limited to activities in\nwhich a sale or offer for sale is communicated during a telephone call. In rejecting an argument\nthat \xe2\x80\x9ctelemarketing\xe2\x80\x9d does not include telephone calls designed to setup a meeting at which sales\nmay take place, the Commission observed:\n[T]he definition of \xe2\x80\x9ctelemarketing\xe2\x80\x9d does not require that the purchase be made\nduring the telephone conversation. The definition simply states that the call be\n\xe2\x80\x9cconducted to induce the purchase of goods or services.\xe2\x80\x9d The inducement could\nbe made during the telephone call, or it could be in the form of setting up a\nsubsequent face-to-face meeting at which an additional sales presentation could\ntake place.\n\n\x0cJean L. Kiddoo\nBingham McCutchen LLP\nRequest for Advisory Opinion\n\nFebruary 4, 2010\nPage 3\n\nTelemarketing Sales Rule, Final Rule, 68 Fed. Reg. 4579, 4655-56 (2003).1 Consistent with this\ninterpretation of the term \xe2\x80\x9ctelemarketing,\xe2\x80\x9d the Commission has brought enforcement actions\nagainst telemarketers who delivered prerecorded messages that are not designed to make sales\nover the telephone, but to induce consumers to purchase goods or services by other means, such\nas sales events at retail stores.2\nAlthough the Commission has observed that \xe2\x80\x9ctelemarketing\xe2\x80\x9d does not include\n\xe2\x80\x9cinformational messages,\xe2\x80\x9d it has stressed that the TSR does cover messages that combine an\ninformational message with direct or indirect solicitation. See Telemarketing Sales Rule, Final\nRule Amendments, 73 Fed. Reg. at 51173 (2008); Telemarketing Sales Rule, 71 Fed. Reg. 58725,\nn.107 (2006). Examples of messages that provide information but are also part of a campaign to\ninduce sales include invitations to special retail sales and events, ticket offers for musical events,\nand announcements of local promotions. 73 Fed. Reg. at 51,173 n.113.\nWe conclude that the proposed prerecorded messages announcing temporary access to\nRCN channels, followed by subsequent communications concerning how RCN subscribers may\npurchase continued access to these channels, are part of a plan, program or campaign to induce\nsales and are not purely informational. Therefore, even though details regarding price and how\nRCN subscribers can purchase access to the channels described in the messages are conveyed\nthrough the programming, rather than through the prerecorded messages, the telephone calls fall\nwithin the statutory and regulatory language defining \xe2\x80\x9ctelemarketing.\xe2\x80\x9d A person who initiates\nsuch calls is doing so \xe2\x80\x9cin connection with telemarketing,\xe2\x80\x9d 16 C.F.R. \xc2\xa7 310.2(bb), and, therefore,\nis a \xe2\x80\x9ctelemarketer\xe2\x80\x9d subject to the restrictions on the delivery of prerecorded messages in 16\nC.F.R. \xc2\xa7 310.4(b)(1)(v)(A). The TSR also prohibits a seller from causing a telemarketer to\nengage in initiating telephone calls to deliver such messages.\nAs noted above, 16 C.F.R. \xc2\xa7 310.4(b)(1)(v)(A) permits telemarketers and sellers to make\noutbound telephone calls to deliver prerecorded messages if the seller has obtained from the\nrecipient of the call an express agreement that evidences the willingness of the recipient to\nreceive calls that deliver prerecorded messages by or on behalf of a specific seller. Such an\nauthorization is not valid if the seller requires, directly or indirectly, that the agreement be\n1\n\nSee also 68 Fed. Reg. at 4587 (2003) (\xe2\x80\x9cThus, a sales call using a prerecorded message\nmay be \xe2\x80\x98telemarketing\xe2\x80\x99 if it is part of a plan, program, or campaign for the purpose of inducing\nthe purchase of goods or services or inducing a donation to a charitable organization, is\nconducted by use of one or more telephones, and involves more than one interstate call.\xe2\x80\x9d)\n2\n\nSee, e.g., United States v. Voice-Mail Broadcasting Corp., Civ. No. 2:08-cv-00521\n(C.D. Cal., filed Jan. 15, 2004) (prerecorded messages promoting retail sales); United States v.\nThe Broadcast Team, Civ. No. 6:05-cv-01920 (M.D. Fla., filed Dec. 29, 2005) (prerecorded\nmessages promoting attendance at conferences).\n\n\x0cJean L. Kiddoo\nBingham McCutchen LLP\nRequest for Advisory Opinion\n\nFebruary 4,2010\nPage 4\n\nexecuted as a condition of purchasing any good or service, including services such as those that\nRCN provides to subscribers. !d. \xc2\xa7 31O.4(b)(I)(v)(A)(ii).\nPlease be advised that this opinion is based exclusively on the information furnished in\nyour letter. In addition, please be advised that the views expressed in this letter are those of the\nFTC staff. They have not been reviewed, approved, or adopted by the Commission, and they are\nnot binding upon the Commission. However, they do reflect the opinions of the staff members\ncharged with enforcement of the TSR. Staff opinions concerning the TSR are routinely posted\non the FTC website at http://www.ftc.govlbcp/telemarketing/staffopinions.shtm.\n\nV~0:A\n.\nLOIS Greism!n~\nAssociate Director\nDivision of Marketing Practices\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\nCraig Tregillus\nctregillus@ ftc.gov\n\nD irect D ial: (202) 326-2970\nFacsim ile: (202) 326-3395\n\nNovember 24, 2009\nMs. Lisa Carlson, Executive Director\nFuneral Ethics Organization\n87 Upper Access Road\nHinesburg, VT 05461-4431\nMs. Holly Stevens\n5918 Pepper Road\nOak Ridge, N.C. 27310-9631\nT. Scott Gilligan, Esq.\nGilligan Law Offices\n3734 Eastern Avenue\nCincinnati, OH 45226\nDear Ms. Carlson, Ms. Stevens, and Mr. Gilligan:\nThis staff opinion addresses the question of whether there are any circumstances under\nwhich a funeral provider may charge a fee for its basic services and overhead that is less than the\nnon-declinable basic services fee listed in its General Price List (\xe2\x80\x9cGPL\xe2\x80\x9d).1 The Funeral Ethics\nOrganization (\xe2\x80\x9cFEO\xe2\x80\x9d) questions whether the Funeral Rule permits a lower fee, the National\nFuneral Directors Association (\xe2\x80\x9cNFDA\xe2\x80\x9d) argues that the Rule has always permitted a reduced\nfee for certain services, and a group advocating home funerals contends that the Funeral Rule\nshould allow consumers to make limited use of the services of a cooperating funeral home\nwithout being required to pay the full non-declinable basic services fee listed on its GPL.2\n\n1\n\nThe Rule permits a funeral provider to charge a basic services fee to recover its\ncosts \xe2\x80\x9cin arranging any funeral\xe2\x80\x9d for its overhead and the services of the funeral director and staff.\n16 CFR \xc2\xa7\xc2\xa7 453.1(p); 453.2(b)(4)(iii)(C). If this fee is non-declinable, the provider must disclose\neither that the fee will be added to the cost of the funeral goods and services selected, or that it is\nincluded in the price of the provider\xe2\x80\x99s caskets, and that clients who provide their own caskets\nwill be charged the same fee. 16 CFR \xc2\xa7\xc2\xa7 462.2(b)(4)(iii)(C)(l)-(2).\n2\n\nThis group has prepared a manual for consumers who wish to care for the dead at\nhome. Home Funeral Committee Manual Publishing Group, Undertaken With Love: A Home\nFuneral Guide for Congregations and Communities (2007), available at http://www.\nhomefuneralmanual.org/homefuneralfinalfinal.pdf. Their request notes that a number of state\nstatutes require that a licensed funeral director be involved, however minimally, thus forcing\n\n\x0cMs. Lisa Carlson et al.\nPage 2 of 4\nThe FEO questions whether, if the basic services fee listed on a GPL is non-declinable,\nthe funeral provider may charge less than the full amount of that fee for four services that must\nbe itemized in the GPL: forwarding remains, receiving remains, direct cremation, and\nimmediate burial. The NFDA counters that because these four specialized services require fewer\n\xe2\x80\x9cservices of funeral director and staff\xe2\x80\x9d and entail less use of facilities and overhead than\ntraditional funeral arrangements, requiring a funeral provider to charge its full basic services fee\nwould be unjustified. The NFDA adds that the Commission never previously indicated that the\nRule requires a funeral provider to charge its full non-declinable basic services fee for these four\nservices, and that it has been the long-standing practice of many funeral providers to charge a\nreduced basic services fee for each of these four services.\nThe FEO\xe2\x80\x99s question arises from the wording of a disclosure required by the Rule when\nthe basic services fee is non-declinable. Section 453.2(b)(4)(iii)(C)(1) of the Rule mandates that\nthe following prescribed statement appear in the GPL under the price and description of the\nservices provided if the basic services fee is non-declinable:\nThis fee for our basic services will be added to the total cost of the\nfuneral arrangements you select. (This fee is already included in\nour charges for direct cremation, immediate burials, and\nforwarding or receiving remains.)3\nThe FEO asks whether the two parallel references to \xe2\x80\x9cthis fee\xe2\x80\x9d mean that a nondeclinable basic services fee must be the same for all funeral arrangements, including the four\nservices at issue that are specifically mentioned in the second sentence of the statement. We\nthink not, for three reasons.\nFirst, the Rule uses the term \xe2\x80\x9cthis same fee\xe2\x80\x9d when that is what it means. Section\n453.2(b)(4)(iii)(C)(2) of the Rule specifies that when a funeral provider elects to include its\nnon-declinable basic services fee in the price of its caskets, it must be the very same fee it\ncharges to consumers who do not purchase a casket: \xe2\x80\x9cThis same fee shall be added to the total\ncost of your funeral arrangements if you provide the casket.\xe2\x80\x9d4 The use of two distinct terms,\n\xe2\x80\x9cthis fee\xe2\x80\x9d and \xe2\x80\x9cthis same fee,\xe2\x80\x9d therefore, suggests that the two are not necessarily synonymous.\nSecond, reading the Rule to prohibit a reduced basic services fee for forwarding remains,\nreceiving remains, direct cremations and immediate burials, would be inconsistent with a core\nconsumers who want home funerals to pay the funeral provider\xe2\x80\x99s non-declinable basic services\nfee. Some states require the funeral director to do little more than sign the death certificate,\nwhile other states simply mandate that a funeral director either \xe2\x80\x9cbe present\xe2\x80\x9d at the final\ndisposition, or that the final disposition be conducted \xe2\x80\x9cunder the supervision of\xe2\x80\x9d a licensed\nfuneral director.\n3\n\n16 CFR \xc2\xa7 453.2(b)((4)(iii)(C)(1) (emphasis added).\n\n4\n\n16 CFR \xc2\xa7 453.2(b)(4)(iii)(C)(2) (emphasis added).\n\n\x0cMs. Lisa Carlson et al.\nPage 3 of 4\npurpose of the Rule, which is to enable consumers to purchase only the funeral goods and\nservices they want by requiring funeral providers to "unbundle" their offerings. During the era\nof industry-wide package pricing that was prevalent before the Rule took effect, consumers who\nwanted only direct cremations or immediate burials often had no choice but to pay the same\npackage price as consumers who wanted a traditional funeral. Requiring funeral providers to\ncharge the same non-declinable basic services fee for a full traditional funeral as for these four\nmore limited services similarly would require consumers to pay for facilities and services that\nthey would not necessarily use or receive.\nFinally, we note that this interpretation is entirely consistent with prior staff views on the\nissue. The Final Staff Compliance Guidelines for the original Rule make it clear that funeral\nproviders may include \xe2\x80\x9cany charges\xe2\x80\x9d for their professional services in their prices for forwarding\nremains, receiving remains, direct cremation and immediate burial:\nb. Forwarding and Receiving Remains, Direct Cremations and Immediate\nBurials: Sections 453.2(b)(4) (ii) (A)-(D). The Rule requires funeral providers to\ndisclose their prices for forwarding and receiving remains, direct cremations and\nimmediate burials. Unlike the remainder of the goods and services which must be\ndisclosed on the General Price List, any charges for the professional services of\nthe funeral provider should be included in the total price of these four types of\nservices.5\nFor these reasons, it is staff\'s view that the Rule permits funeral providers to reduce their\nbasic services fees for forwarding remains, receiving remains, direct cremations,6 and immediate\nburials,7 in order to reflect the proportionate reduction in facilities overhead and services of the\nfuneral director and staff required to provide them.\nPrior staff opinions have stated, and we re-emphasize here, that a funeral provider may\nnot include a reduced or discounted non-declinable basic services fee in any discount package of\n\n5\n\n50 Fed. Reg. 28062, 28068 (July 9, 1985) (emphasis added). The accompanying\nAnalysis of Public Comments Received on Staff Compliance Guidelines notes that the original\nRule modified the proposed definition of \xe2\x80\x9cservices of funeral director and staff,\xe2\x80\x9d and the final\nGuidelines added this clarification, in response to a concern of the Continental Association of\nFuneral and Memorial Societies (\xe2\x80\x9cCAFMS\xe2\x80\x9d) that services associated with forwarding or\nreceiving remains, cremation, and immediate burial would be \xe2\x80\x9cpackaged\xe2\x80\x9d into the basic services\nfee. 50 Fed. Reg. 28081, 28087 (July 9, 1985). The clarification barred any such \xe2\x80\x9cpackaging\xe2\x80\x9d\nby specifying that a funeral provider should include \xe2\x80\x9cany charges\xe2\x80\x9d for its professional services in\nthe price listed on its GPL for these four services.\n6\n\n\xe2\x80\x9cA \xe2\x80\x98direct cremation\xe2\x80\x99 is a disposition of human remains by cremation, without\nformal viewing, visitation, or ceremony with the body present.\xe2\x80\x9d 16 C.F.R. \xc2\xa7 563.1(g).\n7\n\n\xe2\x80\x9cAn \xe2\x80\x98immediate burial\xe2\x80\x99 is a disposition of human remains by burial, without\nformal viewing, visitation, or ceremony with the body present, except for a graveside service.\xe2\x80\x9d\n16 C.F.R. \xc2\xa7 453.1(k).\n\n\x0cMs. Lisa Carlson et al.\nPage 4 of 4\ngoods and services it offers, but must include in the price of the discount package the full nondeclinable basic services fee listed in its GPL.8 As another staff opinion has stated, however,\nthat forwarding remains, receiving remains, direct cremation and immediate burial are not\n\xe2\x80\x9cpackages,\xe2\x80\x9d and thus are not subject to this prohibition.9\nThe Rule does not address home funerals because they were not considered at the time of\nthe initial rulemaking proceeding or the subsequent amendment proceeding. Home funerals are\nanalogous to the four basic services, however, because they likewise involve reduced or minimal\nuse of a funeral provider\xe2\x80\x99s facilities and staff. As a matter of enforcement policy, therefore, and\nconsonant with the fundamental goals of the Rule, staff will not object to a reduction in the basic\nservices fee for home funerals if it is commensurate with the limited use of the provider\xe2\x80\x99s\nfacilities and services.\nThe views expressed in this letter are those of the FTC staff. They have not been\nreviewed, approved, or adopted by the Commission, and they are not binding on the Commission\nor any individual Commissioner. However, they do reflect the views of FTC staff charged with\nenforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted on the FTC\nwebsite at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n8\n\nStaff Opinion 09-1 (Feb. 17, 2009), available at http://www.ftc.gov/bcp/conline/\nedcams/funerals/opinions/opinion09-1.pdf; Staff Opinion 97-3 (Apr. 16, 1997), available at\nhttp://www.ftc.gov/bcp/conline/edcams/funerals/opinions/opinion97-3.pdf.\n9\n\nStaff Opinion 07-6 (Aug. 21, 2007), available at http://www.ftc.gov/bcp/conline/\nedcams/funerals/opinions/opinion07-6.pdf.\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nFederal Trade Com m ission\nD ivision of M arketing Practices\n\nSeptember 11, 2009\nMr. Michael Bills, CEO\nCall Assistant, LLC\n1925 West Indiana Avenue\nSalt Lake City, Utah 84104\nDear Mr. Bills:\nYou have requested an informal staff opinion as to the applicability to 2008 amendments\nto the Telemarketing Sales Rule (\xe2\x80\x9cTSR\xe2\x80\x9d) to a particular technology used by CallAssistant, L.C.\n(\xe2\x80\x9cCallAssistant\xe2\x80\x9d). The amendments at issue impose new restrictions on the use of prerecorded\nmessages in telemarketing. 16 C.F.R. \xc2\xa7 310.4(b)(1)(v); 73 Fed. Reg. 15204 (Aug. 29, 2008).\nSpecifically, these amendments require, as of December 1, 2008, that any outbound\ntelemarketing call that delivers a prerecorded message include: (1) if the call could be answered\nin person by a consumer, an automated interactive voice and/or keypress-activated opt-out\nmechanism that the call recipient can use at any time during the message to assert a Do Not Call\nrequest pursuant to \xc2\xa7 310.4(b)(1)(iii)(A); and (2) if the call could be answered by an answering\nmachine or voicemail service, a toll-free telephone number that the call recipient can use to\nassert a Do Not Call request pursuant to \xc2\xa7 310.4(b)(1)(iii)(A). Additionally, as of September 1,\n2009, the amendments prohibit any outbound telemarketing call that delivers a prerecorded\nmessage unless the seller has obtained from the recipient of the call an express agreement, in\nwriting, that evidences the willingness of the recipient of the call to receive calls that deliver\nprerecorded messages by or on behalf of that seller and includes such person\xe2\x80\x99s telephone number\nand signature.\nAs described in your letter, CallAssistant uses technology that enables its calling agents\nto interact with the recipient of a call using his or her own voice or by substituting appropriate\naudio recording of a response. According to your letter, when used to place outbound\ntelemarketing calls, this technology works as follows:\nA live agent using the System places a call to a consumer and hears the consumer\ngreeting. In response to the greeting, the agent may elect to speak to the call\nrecipient using his or her voice, or may press a button to play an appropriate\nrecorded script segment. After the agent\xe2\x80\x99s response, the agent listens to the\nconsumer customer\xe2\x80\x99s reply. After listening to the consumer\xe2\x80\x99s reply, the live\nagent again chooses whether to speak to the call recipient in his or her own voice,\nor another recording. At all times, even during the playing of any recorded\nsegment, the agent retains the power to interrupt any recorded message to listen to\nthe consumer and respond appropriately.\n\n\x0cMr. Michael Bills\nPage 2 of 3 Pages\nFurthermore, according to your description, \xe2\x80\x9clive agents hear every word spoken by the call\nrecipient, and determine what is said\xe2\x80\x9d in response. A single agent always stays with a call from\nbeginning to end.\nYou seek an opinion as to whether the amended TSR provisions on the use of\nprerecorded messages in telemarketing apply to CallAssistant\xe2\x80\x99s calls that employ the technology\nsummarized above. Based on the description of the technology included in your letter, the staff\nof the Federal Trade Commission has concluded that the 2008 TSR amendments cited above do\nnot prohibit telemarketing calls using this technology if the calls that otherwise comply with the\nTSR and other applicable law. The 2008 amendments at 16 C.F.R. \xc2\xa7 310.4(b)(1)(v) prohibit\ncalls that deliver a prerecorded message and do not allow interaction with call recipients in a\nmanner virtually indistinguishable from calls conducted by live operators. Unlike the\ntechnology that you describe, the delivery of prerecorded messages in such calls does not\ninvolve a live agent who controls the content and continuity of what is said to respond to\nconcerns, questions, comments \xe2\x80\x93 or demands \xe2\x80\x93 of the call recipient.\nIn adopting the 2008 TSR amendments, the Commission noted that the intrusion of a\ntelemarketing call on a consumer\xe2\x80\x99s right to privacy \xe2\x80\x9cmay be exacerbated immeasurably when\nthere is no human being on the other end of the line.\xe2\x80\x9d 73 Fed. Reg. at 51180. The Commission\nobserved that special restrictions on prerecorded telemarketing messages were warranted\nbecause they \xe2\x80\x9cconvert the telephone from an instrument for two-way conversations into a oneway device for transmitting advertisements.\xe2\x80\x9d Id.1 Consequently, in Staff\xe2\x80\x99s view, the concerns\nabout prerecorded messages addressed in the 2008 TSR amendments do not apply to the calls\ndescribed above, in which a live human being continuously interacts with the recipient of a call\nin a two-way conversation, but is permitted to respond by selecting recorded statements.\nNevertheless, the use of such technology in a campaign to induce the sales of goods or\nservices, or charitable donations is \xe2\x80\x9ctelemarketing\xe2\x80\x9d under the Telemarketing and Consumer\nFraud and Abuse Prevention Act, 15 U.S.C. \xc2\xa7 6106(4), and therefore must comply with the\nRule\xe2\x80\x99s other requirements and prohibitions. In particular, the technology must connect an\noutbound telephone call to a live agent within two seconds of the call recipient\xe2\x80\x99s completed\ngreeting. 16 C.F.R. \xc2\xa7 310.4(b)(1)(iv). The agents making calls using this technology must\n\n1\n\nIn adopting the 2008 amendments, the Commission recognized that in the future prerecorded\nmessage might eliminate the objections that prompted the adoption of the these rules and justify\nexemptions permitting interactive prerecorded messages:\n[T]he Commission notes that it is aware that the technology used in making prerecorded\nmessages interactive is rapidly evolving, and that affordable technological advances may\neventually permit the widespread use of interactive messages that are essentially\nindistinguishable from conversing with a human being. Accordingly, nothing in this\nnotice should be interpreted to foreclose the possibility of petitions seeking further\namendment of the TSR or exemption from the provisions adopted here.\n73 Fed. Reg. 51180 (Aug. 29, 2008).\n\n\x0cMr. Michael Bills\nPage 3 of 3 Pages\ndisclose the purpose of the call, the identity of the seller, make other required disclosures, and\ncomply with other TSR provisions preventing deceptive and abusive conduct. Id. \xc2\xa7\xc2\xa7 310.3 and\n310.4.\nPlease be advised that this opinion is based exclusively on all the information furnished\nin your request. This opinion applies only to the extent that actual company practices conform to\nthe material submitted for review. Please be advised further that the views expressed in this\nletter are those of the FTC staff. They have not been reviewed, approved, or adopted by the\nCommission, and they are not binding upon the Commission. However, they do reflect the\nopinions of the staff members charged with enforcement of the TSR.\n\nS:C/:lY\n,\n\n\\\n\n~~{:Lois Greisman\nAssociate Director\nDivision of Marketing Practices\n\n\x0c'


b'PLEASE NOTE:\nAs of July 21, 2011, only the Consumer\nFinancial Protection Bureau (\xe2\x80\x9cCFPB\xe2\x80\x9d) can\nissue advisory opinions relating to the\nFDCPA.\n\n\x0cUN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nO ffice of the Secretary\n\nJune 23, 2009\nRozanne M. Anderson, Esq.\nACA International\n4040 W. 70th Street\nMinneapolis, MN 55345\n\nAndrew M. Beato, Esq.\nStein, Mitchell & Mezines, LLP\n1100 Connecticut Avenue, N.W., Suite 1100\nWashington, DC 20036\n\nDear Ms. Anderson and Mr. Beato:\nThis responds to an issue raised in your comment filed on February 11, 2008, on behalf\nof American Collectors Association International, with the Federal Trade Commission (\xe2\x80\x9cCommission\xe2\x80\x9d) and other agencies charged by Congress in Section 312 of the FACT Act with writing\nregulations relating to certain duties of furnishers of information to consumer reporting agencies\n(\xe2\x80\x9cCRAs\xe2\x80\x9d). On pages 7-8 of your comment, you urged the following action:\nTo avoid a statutory conflict between the FDCPA and FACT Act, the\nregulation should clarify that the act of responding to a consumer dispute is not an\nattempt to collect a debt under the FDCPA. Further the regulation should clarify\nthat a consumer that sends a written dispute to a furnisher after having invoked\nhis or her cease communication rights under the FDCPA has revoked his or [her]\ncease communication instruction for purposes of communicating with the\nfurnisher to process the dispute. (Emphasis yours)\nThe Commission is treating this portion of your comment as a request for an advisory\nopinion interpreting the Fair Debt Collection Practices Act (FDCPA) pursuant to Sections 1.11.4 of its Rules of Practice. 16 C.F.R. \xc2\xa7\xc2\xa7 1.1-1.4. The subject matter of the request and\nconsequent publication of this Commission advice is in the public interest. 16 C.F.R. \xc2\xa7 1.1(a)(2).\nSpecifically, it is in the public interest for the Commission to clarify the intersection of the\nFDCPA and this new rule implementing the FACT Act, thus encouraging debt collector\ncompliance with both laws.\nThe applicable provisions of the FDCPA and the furnisher disputes rule (Rule) are:\n\xe2\x80\xa2\n\nSection 805(c) of the FDCPA provides that if a consumer has notified a debt collector in\nwriting that \xe2\x80\x9cthe consumer wishes the debt collector to cease further communication with\nthe consumer, the debt collector shall not communicate with the consumer with respect to\nsuch debt\xe2\x80\x9d (with some exceptions not applicable here).\n\n\xe2\x80\xa2\n\nThe Rule requires furnishers of information to CRAs to report the results of a direct\ndispute to the consumer, 16 CFR \xc2\xa7 660.4(e)(3), or notify the consumer if the furnisher\ndetermines the dispute is frivolous or irrelevant. 16 CFR \xc2\xa7 660.4(f)(2).\n\n\x0cThe potential conflict arises when a consumer orders a debt collector in writing to cease\ncommunication, but at some future time submits a direct dispute about information the debt\ncollector has provided to a CRA. The Rule requires the collector to notify the consumer either\nof the results of the investigation or of its determination that the dispute is frivolous or irrelevant.\nSection 805(c) of the FDCPA, however, prohibits the collector from communicating with that\nconsumer with respect to the debt, which could be interpreted to include providing the notice\nthat the Rule requires.\nThe Commission does not believe that providing the notice the Rule requires undermines\nthe purpose of Section 805(c) of the FDCPA. Section 805(c) empowers consumers to direct\ncollectors to cease contacting them to collect a debt so that consumers can be free of the burden\nof being subject to unwanted communications. In contrast, communications from debt collectors\nwhich do nothing more than respond to disputes consumers themselves have raised do not\nimpose such a burden. Rather, such communications benefit consumers through providing them\nwith information demonstrating that collectors have been responsive to their disputes.\nAfter reviewing the language of the FDCPA and the Rule, and considering the goals of\nthe statute and the regulation, the Commission concludes that a debt collector does not violate\nSection 805(c) of the FDCPA if the consumer directly disputes information after sending a\nwritten \xe2\x80\x9ccease communication\xe2\x80\x9d to the collector, and the collector complies with the Rule by\nmeans of a communication that has no purpose other than complying with the Rule by stating\n(1) the results of the investigation or (2) the collector\xe2\x80\x99s belief that the communication is\nfrivolous or irrelevant.\nBy direction of the Commission.\n\nDonald S. Clark\nSecretary\n\n\x0c'


b'UN ITED STATES OF AM ERICA\n\nFEDERAL TRADE COMMISSION\nW ASH IN GTO N , D .C. 20580\n\nD ivision of M arketing Practices\nCraig Tregillus\nctregillus@ ftc.gov\n\nD irect D ial: (202) 326-2970\nFacsim ile: (202) 326-3395\n\nApril 16, 2009\nMr. David Nixon, President\nNixon Consulting, Inc.\nP.O. Box 440\nChatham, IL 62629-0440\nDear Mr. Nixon:\nYou have requested clarification of the portion of Staff Opinion 07-2 that addressed the\nuse of a vehicle to obtain death certificates.1 That opinion stated staff\xe2\x80\x99s view that if the use of an\nautomobile to obtain necessary permits and death certificates is \xe2\x80\x9ccommon to virtually all forms\nof disposition or arrangements\xe2\x80\x9d of a funeral provider, the cost should be included in the\nprovider\xe2\x80\x99s basic services fee. The opinion added that a separate charge for the use of a vehicle\ncould be included in the provider\xe2\x80\x99s General Price List (\xe2\x80\x9cGPL\xe2\x80\x9d) only if the use of a vehicle for\nthat purpose is not \xe2\x80\x9ccommon to virtually all forms of disposition or arrangements.\xe2\x80\x9d\nAs an initial matter, the test of whether a service is \xe2\x80\x9ccommon to virtually all forms of\ndisposition or arrangements\xe2\x80\x9d does not apply to the 13 specific services the Rule requires a\nprovider who offers those services to itemize in its GPL.2 That is because the definition of the\nbasic service fee in Section 453.1(p) of the Rule,3 expressly excludes fees for those services.\nThe Rule states that the basic services covered by the fee are \xe2\x80\x9cnot to be included in other\ncategories [of the mandatory GPL disclosures] in \xc2\xa7 453.2(b)(4)\xe2\x80\x9d of the Rule.4\nConversely, none of the fees for the specific services that the Rule requires a provider to\nitemize in the GPL may be included in the basic services fee. These fees must be separately\ndisclosed as mandated by the Rule, regardless of whether or not they are common to \xe2\x80\x9cvirtually\nall forms of disposition or arrangements.\xe2\x80\x9d Accordingly, the costs of \xe2\x80\x9cOther Preparation of the\nBody,\xe2\x80\x9d \xe2\x80\x9cTransfer of Remains,\xe2\x80\x9d and the use of a \xe2\x80\x9cHearse\xe2\x80\x9d should not be included in the basic\n\n1\n\nStaff Opinion 07-2 (Mar. 21, 2007), available at http://www.ftc.gov/bcp/conline\n/edcams/funerals/opinions/opinion07-2.pdf.\n2\n\n16 C.F.R. \xc2\xa7 453.2(b)(4)(A)-(M).\n\n3\n\n16 C.F.R. \xc2\xa7 453.1(p).\n\n4\n\n16 C.F.R. \xc2\xa7 453.2(b)(4).\n\n\x0cMr. David Nixon\nPage 2 of 3\nservices fee because the Rule requires funeral providers to itemize the prices of each of these\nthree services separately in the GPL.\nYou question why a separate charge for the use of a vehicle to obtain permits is not\npermitted when the use of a vehicle for \xe2\x80\x9cTransfer of Remains\xe2\x80\x9d is no less \xe2\x80\x9ccommon to virtually\nall dispositions or arrangements.\xe2\x80\x9d The answer is that Section 453.2(b)(4) of the Rule requires an\nitemized price for \xe2\x80\x9cTransfer of Remains,\xe2\x80\x9d but does not require an itemized price for the use of a\nvehicle to obtain permits or death certificates. If the use of a vehicle to obtain permits or death\ncertificates is \xe2\x80\x9ccommon to virtually all dispositions or arrangements,\xe2\x80\x9d this cost is basically an\noverhead cost that should be included in the basic services fee.\nYou also ask whether it would still be the case that the use of a vehicle to obtain death\ncertificates, although \xe2\x80\x9ccommon to virtually all dispositions or arrangements\xe2\x80\x9d of a funeral\nprovider, may not be listed separately in the provider\xe2\x80\x99s GPL if the provider receives remains\nfrom other funeral homes that have obtained death certificates already. The answer depends, of\ncourse, on the relative proportion of the funeral provider\xe2\x80\x99s arrangements involving receipt of\nremains from other funeral homes that have obtained the death certificates compared to its\nregular funeral arrangements, and cannot be answered definitively in the abstract. If the receipt\nof such remains is infrequent or occasional at best, amounting to a de minimis portion of a\nfuneral provider\xe2\x80\x99s business, the provider would have no basis for listing a separate fee in its GPL\nfor the use of a vehicle to obtain death certificates.5\nFinally, you inquire whether a funeral provider can include a separate charge in its GPL\nfor the use of a vehicle to obtain permits simply by deleting any reference to \xe2\x80\x9cobtaining\nnecessary permits\xe2\x80\x9d from its description of the services included in the basic services fee. If\nobtaining permits is not \xe2\x80\x9ccommon to virtually all form of disposition or arrangements,\xe2\x80\x9d a funeral\nprovider should not include that cost in its basic services fee, and may list a separate fee in its\nGPL for obtaining the permits, including the use of a vehicle to do so. On the other hand, if\nobtaining permits is, in fact, \xe2\x80\x9ccommon to virtually all forms of disposition or arrangements,\xe2\x80\x9d the\nfuneral provider should include all the costs of obtaining them, including the use of a vehicle, in\nits basic services fee.\nIn view of your questions, it is worth emphasizing that funeral providers may include the\ncost not only of the services of the funeral director and staff in the basic services fee, but also\nsuch overhead costs as the cost of operating a vehicle used to obtain permits or death certificates,\nas noted above. In addition, there is nothing in the Rule to prevent a funeral provider from\nplacing reasonable limits on the time it will spend and/or the distance it will travel to obtain\n\n5\n\nNothing in the Rule, however, prevents a funeral provider from limiting the\nquantity of death certificates it will obtain as part of its basic services to the number of copies\nthat is \xe2\x80\x9ccommon to virtually all forms of dispositions or arrangements,\xe2\x80\x9d provided that this\nlimitation is spelled out in the description of the \xe2\x80\x9cprincipal basic services provided\xe2\x80\x9d in return for\nthe basic services fee as required by \xc2\xa7 453.2(b)(4)(iii)(C)(1) of the Rule, 16 CFR\n\xc2\xa7 453.2(b)(4)(iii)(C)(1), and separately listing a fee in its GPL for additional copies.\n\n\x0cMr. David Nixon\nPage 3 of 3\npermits or death certificates as part of its basic services fee, and listing a separate fee on its GPL\nfor any additional time and/or distance that may be required in unusual circumstances. A funeral\nprovider will, of course, have the burden of demonstrating that any such limits are reasonable,\nand broad enough to encompass \xe2\x80\x9cvirtually all dispositions or arrangements.\xe2\x80\x9d\nAs you know, the views expressed in this letter are those of the FTC staff. They have not\nbeen reviewed, approved, or adopted by the Commission, and they are not binding on the\nCommission or any individual Commissioner. However, they do reflect the views of FTC staff\ncharged with enforcement of the Funeral Rule. Staff Funeral Rule opinions are routinely posted\non the FTC website at http://www.ftc.gov/bcp/conline/edcams/funerals/staffopinions.shtm.\nSincerely,\n/s/\nCraig Tregillus\nFuneral Rule Coordinator\n\n\x0c'