RAYMOND A. NOWAK
Chief, Civil Division
Assistant United States Attorney
Texas Bar No. 15121490
601 N.W. Loop 410, Suite 600
San Antonio, TX 78216
(210) 530-6110; (210) 530-6108 (Fax)
 
ELIZABETH STEIN
Attorney
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
Washington, DC 20530
(202) 307-0486; (202) 514-8742 (Fax)


UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS

UNITED STATES OF AMERICA, Plaintiff,

v.

DELL COMPUTER CORPORATION, a corporation, Defendant.

Civil Action No.

CONSENT DECREE AND ORDER
FOR CIVIL PENALTIES, INJUNCTIVE AND OTHER RELIEF

WHEREAS Plaintiff, the United States of America, has commenced this action by filing the Complaint herein; defendant, Dell Computer Corporation, has waived service of the Summons and Complaint; the parties have been represented by the attorneys whose names appear hereafter; and the parties have agreed to settlement of this action upon the following terms and conditions, without adjudication of any issue of fact or law and without defendant admitting liability for any of the matters alleged in the Complaint, the Court finds:

1. This Court has jurisdiction of the subject matter and of the parties.

2. The Complaint states a claim upon which relief may be granted against the defendant under Sections 5(a)(1), 5(m)(1)(A), 9, 13(b) and 16(a) of the Federal Trade Commission Act, 15 U.S.C. 45(a)(1), 45(m)(1)(A), 49, 53(b) and 56(a).

THEREFORE, on the joint motion of plaintiff and defendant, it is hereby ORDERED and DECREED as follows:

DEFINITION

For the purposes of this Consent Decree, the term "Mail Order Rule" means the Federal Trade Commission's Trade Regulation Rule entitled "Mail or Telephone Order Merchandise" 16 C.F.R. Part 435, and as it may hereafter be amended.

INJUNCTION

1. Defendant Dell Computer Corporation, and its successors, assigns, officers, agents, servants, and attorneys, and those persons in active concert or participation with them who receive actual notice of this Consent Decree by personal service or otherwise, whether acting directly or through any business entity, corporation, subsidiary, division, or other device, in connection with the advertising, offering for sale or sale, in or affecting commerce, of personal computer systems, be and are hereby permanently restrained and enjoined from violating the Mail Order Rule in any way, including but not limited to:

    • Soliciting orders for the sale of telephone or mail order merchandise when it has no reasonable basis to expect that it will be able to ship some or all of such merchandise within the time stated in the solicitation or, if no time is stated clearly and conspicuously in the solicitation, within thirty (30) days after receipt of a properly completed order, as required by 16 C.F.R.   435.1(a)(1);
    • Failing to offer to the buyer, clearly and conspicuously and without prior demand, an option either to consent to a delay in shipping or to cancel the order and receive a prompt refund, as required by 16 C.F.R.  435.1(b)(1);
    • Failing to offer to the buyer a prepaid means of exercising the buyer's options as described in 16 C.F.R.  435.1(b)(1), as required by 16 C.F.R.  435.1(b)(3); and
    • Having failed to offer the option to consent to a delay or to cancel the order and receive a prompt refund, as required by 16 C.F.R.  435.1(b)(1), and also having failed to ship the merchandise within the applicable time, failing to deem the order canceled and to make a prompt refund, as required by 16 C.F.R.  435.1(c)(5);

Provided that, in the event the Mail Order Rule is hereafter amended or modified, defendant's compliance with that Rule as so amended or modified shall not be deemed a violation of this Consent Decree.

CIVIL PENALTY

2. Defendant Dell Computer Corporation, and its successors and assigns, shall pay to the plaintiff, pursuant to section 5(m)(1)(A) of the FTC Act, 15 U.S.C.  45(m)(1)(A), a civil penalty in the amount of $800,000. Defendant shall make this payment within five (5) days of the date of entry of this Consent Decree by electronic fund transfer in accordance with the instructions provided by the Office of Consumer Litigation, Civil Division, U.S. Department of Justice, Washington, D.C. 20530, for appropriate disposition.

3. Except as set forth in paragraph 4 below, each party to this Consent Decree hereby agrees to bear its own costs and attorney fees incurred in connection with this action; provided, however, in the event that the United States initiates proceedings to enforce the provisions of this Consent Decree, and provided further that the Court determines that defendant Dell Computer Corporation has violated any term or provision of this Consent Decree, defendant Dell Computer Corporation shall pay the costs and attorney fees incurred by the United States in connection with proceedings to enforce this Consent Decree.

4. Notwithstanding any other provision of this Consent Decree, defendant Dell Computer Corporation agrees that, if defendant Dell Computer Corporation fails to meet the payment obligations set forth in Paragraph 2, defendant Dell Computer Corporation shall pay the costs and attorney fees incurred by the United States and its agents in any attempts to collect amounts due pursuant to this Consent Decree. Defendant Dell Computer Corporation further agrees that the facts as alleged in the Complaint filed with this Consent Decree shall be taken as true in any subsequent litigation filed by the United States to enforce its rights pursuant to this Consent Decree, including but not limited to a nondischargeability complaint in any subsequent bankruptcy proceeding.

NOTIFICATION AND REPORTING REQUIREMENTS

5. Defendant Dell Computer Corporation, a corporation, shall, within thirty (30) days of the entry of this Consent Decree, provide a copy of this Consent Decree and the Mail Order Rule, to each of its officers, and to each of its sales representatives and employees whose duties include the exercise of managerial or supervisorial responsibility regarding mail order sales of personal computer systems, and secure from each such person a signed statement acknowledging receipt of a copy of this Consent Decree and the Mail Order Rule.

6. For a period of five (5) years from the date of entry of this Consent Decree, defendant Dell Computer Corporation, a corporation, and its successors and assigns, shall provide a copy of this Consent Decree to each officer, and to each sales representative and employee whose duties include the exercise of managerial or supervisorial responsibility regarding mail order sales of personal computer systems, within fifteen (15) days after such person commences his or her duties, and shall obtain from each such person a signed statement acknowledging receipt of this Consent Decree.

7. For a period of five (5) years from the date of entry of this Consent Decree, defendant Dell Computer Corporation, and its successors and assigns, shall maintain and make available to the Federal Trade Commission, within ten (10) days of the date of receipt of a written request, business records demonstrating compliance with the terms and provisions of this Consent Decree.

8. Defendant Dell Computer Corporation, and its successors and assigns, shall notify the Commission at least thirty (30) days prior to any proposed change in said defendant, including but not limited to, dissolution, assignment or sale resulting in the emergence of a successor corporation, the creation or dissolution of subsidiaries, which may affect any compliance obligation arising out of this Consent Decree.

9. This action, and the relief awarded herein, is in addition to and not in lieu of other remedies as may be provided by law, including other proceedings the plaintiff may initiate to enforce this Consent Decree, or other civil or criminal remedies.

10. This Court shall retain jurisdiction of this matter for the purposes of enabling any of the parties to this Consent Decree to apply to the Court at any time for such further orders or directives as may be necessary or appropriate for the interpretation or modification of this Consent Decree, for the enforcement of compliance therewith, or for the punishment of violations thereof.

* * *

IT IS SO ORDERED.

Dated this day of , 19 .

UNITED STATES DISTRICT JUDGE

The parties, by their respective counsel, hereby consent to the terms and conditions of the Consent Decree as set forth above and consent to the entry thereof. Defendant waives any rights that may arise under the Equal Access to Justice Act, 28 U.S.C. 2412, as it may relate to this matter.

FOR THE DEFENDANT:

By:

THOMAS B. GREEN, Senior Vice President, Law and Adminstration
Dell Computer Corporation

PAUL L. YDE
Vinson & Elkins
Attorney for the Defendant

FOR THE FEDERAL TRADE COMMISSION:

JEFFREY KLURFELD
Regional Director

DAVID M. NEWMAN
LINDA K. BADGER
Attorneys
Federal Trade Commission
901 Market Street, Suite 570
San Francisco, CA 94103

FOR THE UNITED STATES OF AMERICA:

FRANK W. HUNGER
Assistant Attorney General
Civil Division
U.S. Department of Justice

JAMES WILLIAM BLAGG
United States Attorney
Western District of Texas

KURT J. BOHN
Assistant United States Attorney

EUGENE THIROLF, Director
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
Washington, D.C. 20530

_____________________
ELIZABETH STEIN
Attorney
Office of Consumer Litigation
Civil Division
U.S. Department of Justice
Washington, D.C. 20530