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Carl Kanowsky:Cracking down on breaches

Posted: April 16, 2014 2:00 a.m.
Updated: April 16, 2014 2:00 a.m.

 

The blue/red strobe lights flashed against the sides of the seemingly quiet single family home in upscale Valencia.

More and more LEOs (Law enforcement officers for those who don’t watch NCIS) vehicles came screeching to the curb outside.

Inside, quivering together were Bill and Mary Singer. Mary, a gray-haired matronly woman, grandmother to twelve, a former music student and current piano teacher to some of the neighbor kids, knew this day was coming.

Her husband, Bill, portly and balding, was, as was his custom, a little clueless. Yes, he had a small business that aided law firms, doing things such as process serving or getting documents copied. But he really didn’t know what he’d done wrong.

Several minutes after the last cop cars arrived, one of the lead investigators took a bull horn and yelled, “Bill and Mary Singer, we are federal officers with the Federal Trade Commission, and your home is surrounded. Come out peaceably, with your hands empty and held high.”

Bill, perpetually on the verge of Alzheimer’s, looked nonplussed at Mary, “What?? The Federal Trade Commission?

What’s going on?”

Mary loved her baffled husband and took to explaining things to him, slowly and carefully.

“Honey, you’re a member of California Association of Legal Support Professionals (“CALSPro”), and I’m a Board Member of Music Teachers National Association (“MTNA”). The FTC investigated the MTNA and discovered that we have over 20,000 members who collectively, according to the FTC, generate $500 million in annual revenue.

“Now, first, Bill, I want you to know that I never earned anything like $1,000,000. But I did agree to follow Code of Ethics, which in part says, ‘The teacher shall respect the integrity of other teachers’ studios and shall not actively recruit students from another studio.’”

Bill went ashen. He couldn’t believe his ears. “But that’s so blatantly anti-competitive. How could you?”

Mary looked pointedly at her husband and said, “Well, you and CALSPro aren’t exactly saints. Your code of ethics stated: 1) “It is unethical to cut the rates you normally and customarily charge when soliciting business from a member firm’s client”; 2) “It is not ethical to . . . speak disparagingly of another member”; and 3) “It is unethical to contact an employee of another member firm to offer him employment with your firm without first advising the member of your intent.”

They both simultaneously realized that the jig was up (not sure what that means), and decided to surrender to the authorities waiting outside.

While the crime drama is phony, it’s absolutely true that the FTC in 2013 went after both MTNA and CALSPro because their respective Code of Conduct/Ethics was, in the opinion of the FTC, anti-competitive.

The Commission said that CALSPro restrained “competition by restricting through its Code of Ethics the ability of its members to compete on price, to solicit legal support professionals for employment, and to advertise.”

As for those nefarious music teachers, the FTC said their organization similarly restricted competition by telling its members not to solicit the customers of its fellow teachers.

Both organizations, having little money and no appetite for fighting Uncle Sam, signed consent orders, requiring them to change their offending Codes.

So, don’t be shocked when your kid’s flute teacher starts undergoing vicious attacks by the other woodwind instructors in town.

Carl Kanowsky of Kanowsky & Associates is an attorney in the Santa Clarita Valley. He may be reached by email at cjk@kanowskylaw.com. Mr. Kanowsky’s column represents his own views, and not necessarily those of The Signal. Nothing contained herein shall be or is intended to be construed as providing legal advice.

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