Announced Actions for September 10, 2004

Commission authorization of the staff to file amicus brief: The Commission has authorized the staff of the FTC’s Office of the General Counsel to file an amicus brief in the matter of Ashby, et al. v. Farmers Group, Inc., No 04-35394 (9th Cir.). The FTC’s brief supports appellant Douglas Ashby and urges reversal of the district court’s decision. In this case, the plaintiffs allege that when a consumer applies for insurance, Farmers Insurance Company of Oregon (FICO) requests a consumer report (commonly known as a “credit report”) regarding the consumer. FICO then uses information in the report to set the initial rate for the insurance it offers the consumer. Specifically, plaintiff Ashby alleges that FICO set the price for the insurance it offered him higher than the price it would have set if the information in his report had been more favorable, and that this constituted an “adverse action,” as that term is defined in the Fair Credit Reporting Act (FCRA). In addition, the plaintiff claims that FICO violated the FCRA by failing to provide him with an adverse action notice, as required by the Act. The district court dismissed the complaint, holding that the FCRA’s definition of adverse action does not encompass setting a higher initial price for insurance. According to the staff, the court improperly ignored the FCRA’s legislative history in making this determination.

As detailed in the brief, which is available on the FTC’s Web site as a link to this press release, the Commission has recommended that the Ninth Circuit reverse the district court’s interpretation of “adverse action,” and hold that an insurer takes “adverse action” with respect to a consumer, where, when setting the initial prices of insurance, the insurer offers insurance only at less favorable terms based on the information in the consumer’s credit report.

The Commission vote authorizing the staff to file the amicus brief was 5-0. This is the fourth brief the staff has filed related to this issue, with similar briefs filed in the Ninth Circuit in Spano v. Safeco, Rausch v. Hartford, and Willes v. State Farm. (FTC File No. P042119; the staff contact is Lawrence DeMille-Wagman, Office of the General Counsel, 202-326-2448; see related press releases issued on January 23, February 24, and August 6, 2004).

Commission approval of proposed divestiture: The Commission has approved an application for proposed divestiture from GenCorp, Inc., related to the FTC’s consent order, arising out of GenCorp’s purchase of the propulsion business of Sequa’s Atlantic Research Corporation (ARC). Under the terms of the consent order, first announced on October 15, 2003, and made final on December 30, 2003, GenCorp is required to divest ARC’s in-space liquid propulsion business within six months of completing the acquisition of ARC. Through the application, GenCorp petitioned

the Commission for approval to divest ARC’s in-space liquid propulsion assets, as that term is defined in the order, to American Pacific Corporation. The Commission also has approved an extension of the time to complete the proposed divestiture, until September 30, 2004.

The Commission vote to approve the proposed divestiture was 3-0-1, with Chairman Deborah Platt Majoras recused. (FTC Docket No. C-4099, File No. 031-0152; the staff contact is Daniel P. Ducore, Bureau of Competition, 202-326-2526; see press releases issued October 15 and December 30, 2003, and May 21, 2004.)

Commission approval of Federal Register notice: The Commission has approved the publication of a Federal Register notice regarding the Labeling Requirements for Alternative Fuels and Alternative Fueled Vehicles. As detailed in the notice, which is available on the Commission’s Web site as a link to this press release and will be issued shortly, the FTC is publishing amendments to the Rule to delete vehicle-specific emissions information and add a reference to the Environmental Protection Agency’s (EPA) green vehicle guide Web site. EPA’s guide provides detailed, comparative information regarding vehicle emissions generally and by model.

The FTC undertook this rulemaking proceeding because the emissions standards on the current alternative fueled vehicle (AFV) label are obsolete as of the 2004 model year, and the Ford Motor Company petitioned the Commission to revise the label. The FTC also conducted a review of the Rule through its regulatory review program. The amendments will become effective 180 days after they are published in the Register. The Commission vote approving publication of the Federal Register notice was 5-0. (FTC File No. R311002; staff contact is Neil Blickman, Bureau of Consumer Protection, 202-326-3038.)

Commission approval of final consent order: Following a public comment period, the Commission has approved a final consent order in the matter concerning Prince Lionheart, Inc. The Commission vote to approve the final consent order and send a letter to the commenter of record was 4-0. (FTC File No. 032-3245; the staff contact is Carol J. Jennings, Bureau of Consumer Protection, 202-326-3010; see press release dated June 21, 2004.)

Copies of the documents mentioned in this release are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.