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                                   Before the

                       Federal Communications Commission

                             Washington, D.C. 20554


                                       )                           
                                                                   
                                       )                           
     In the Matter of                                              
                                       )   File No.: EB-09-SE-227  
     Hobby Lobby International, Inc.                               
                                       )                           
                                                                   
                                       )                           


                                    CITATION

              ILLEGAL MARKETING OF UNAUTHORIZED FREQUENCY DEVICES

   Adopted: November 22, 2010 Released: November 23, 2010

   By the Chief, Spectrum Enforcement Division, Enforcement Bureau:

   I. INTRODUCTION

    1. This is an official CITATION issued pursuant to section 503(b)(5) of
       the Communications Act of 1934, as amended ("Communications Act"), to
       Hobby Lobby International, Inc. ("HLI") for marketing unauthorized
       radio frequency devices in the United States in violation of section
       302(b) of the Communications Act, and section 2.803(a)(1) of the
       Commission's rules ("Rules").

    2. HLI should take immediate steps to come into compliance and to avoid
       any recurrence of this misconduct. As explained below and as provided
       in the Communications Act, future violations of the Rules in this
       regard may subject your company to substantial monetary penalties,
       seizure of equipment, and criminal sanctions.

   II. background

    3. The Office of Engineering and Technology ("OET") of the Federal
       Communications Commission referred to the Enforcement Bureau for
       investigation a complaint alleging that HLI was marketing in the
       United States an unauthorized radio frequency device, specifically,
       the JETI Duplex 2.4 GHz System for radio-controlled models ("JETI
       System"). On March 1, 2010, the Spectrum Enforcement Division
       ("Division") of the Enforcement Bureau issued a letter of inquiry
       ("LOI") to HLI. HLI responded to the LOI on April 7, 2010.

    4. In its LOI Response, HLI stated that the JETI System is manufactured
       by JETI Model, a Czech Republic company for which HLI has distributed
       products in the United States for many years. HLI further stated that
       it imported the JETI System into the United States in late 2008 and
       sold the device into early 2009. Specifically, HLI indicated that it
       sold 25 units in the United States prior to discontinuing sale of the
       device immediately following the initial communication from OET in
       2009.

    5. Additionally, in a Declaration from HLI's Chief Operating Officer,
       David R. Carley, submitted as an attachment to the LOI Response, Mr.
       Carley stated that HLI began selling the JETI Duplex transmitter
       module on March 31, 2009 and that it sold 27 of these modules in the
       United States. Mr. Carley further stated that he "was informed that
       the manufacturer of the module, Jeti Model ... represented to HLI that
       they were in the process of getting FCC approval at the time [HLI]
       started to carry the product." Mr. Carley also indicated that the
       modules in question were imported by HLI and the only date a shipment
       was received was February 20, 2009. Mr. Carley stated that the last
       date on which a module was shipped to a customer was May 8, 2009.
       According to Mr. Carley, when HLI became aware in May 2009 that these
       modules did not have approval from the FCC, HLI took them off its
       website and stopped selling them.

   III. applicable law and violations

    6. Federal law requires that radio frequency devices be certified in
       accordance with the FCC's technical standards before they can be
       marketed in the United States. Section 302(b) of the Communications
       Act provides that "[n]o person shall manufacture, import, sell, offer
       for sale, or ship devices or home electronic equipment and systems, or
       use devices, which fail to comply with regulations promulgated
       pursuant to this section." Section 2.803(a)(1) of the Commission's
       implementing regulations provides that:

   no person shall sell or lease, or offer for sale or lease (including
   advertising for sale or lease), or import, ship, or distribute for the
   purpose of selling or leasing or offering for sale or lease, any radio
   frequency device unless ... [i]n the case of a device subject to
   certification, such device has been authorized by the Commission in
   accordance with the rules in this chapter and is properly identified and
   labeled as required by S: 2.925 and other relevant sections in this
   chapter.

   Pursuant to section 15.201(b) of the Rules, intentional radiators, such as
   the JETI System, must be authorized in accordance with the Commission's
   certification procedures prior to the initiation of marketing in the
   United States. Section 2.803(e)(4) of the Rules defines "marketing" as the
   "sale or lease, or offering for sale or lease, including advertising for
   sale or lease, or importation, shipment or distribution for the purpose of
   selling or leasing or offering for sale or lease."

    7. HLI admits that it marketed the JETI System in the United States and
       that this device was not certified. Accordingly, we find that HLI
       violated section 302(b) of the Communications Act and section
       2.803(a)(1) of the Rules by marketing in the United States an
       unauthorized radio frequency device. We therefore issue this Citation
       to HLI for violating the Communications Act and the Commission's rules
       as discussed above.

   IV. FUTURE COMPLIANCE

    8. If, after receipt of this Citation, HLI violates the Communications
       Act or the Rules by engaging in conduct of the type described herein,
       the Commission may impose monetary forfeitures of up to $16,000 for
       each such violation or each day of a continuing violation and up to
       $112,500 for any single act or failure to act. In addition, violations
       of the Communications Act or the Rules can result in seizure of
       equipment through in rem forfeiture actions, as well as criminal
       sanctions, including imprisonment.

    9. HLI may respond to this Citation within thirty (30) days after the
       release date of this Citation either through (1) a personal interview
       at the closest FCC office, or (2) a written statement. Any written
       statements should specify what actions have been taken by HLI to
       ensure that it does not violate the Rules governing the marketing of
       radio frequency devices in the future. Please reference file number
       EB-09-SE-227 when corresponding with the Commission.

   10. Under the Privacy Act of 1974, any statement or information provided
       by you may be used by the Commission to determine if further
       enforcement action is required. Any knowingly or willfully false
       statement, or concealment of any material fact, made in reply to this
       Citation is punishable by fine or imprisonment. Please also note that
       Section 1.17 of the Rules requires that you provide truthful and
       accurate statements to the Commission.

   V. CONTACT INFORMATION

   11. The closest FCC Office is the Atlanta Office, in Duluth, Georgia. You
       may contact Neal McNeil by telephone, 202-418-1160, to schedule a
       personal interview, which must take place within thirty (30) days
       after the release date of this Citation.

   12. Reasonable accommodations for people with disabilities are available
       upon request. Include a description of the accommodation you will need
       including as much detail as you can. Also include a way we can contact
       you if we need more information. Please allow at least five (5) days
       advance notice; last minute requests will be accepted, but may be
       impossible to fill. Send an e-mail to fcc504@fcc.gov or call the
       Consumer & Governmental Affairs Bureau:

   For sign language interpreters, CART, and other reasonable accommodations:

   202-418-0530 (voice), 202-418-0432 (tty);

   For accessible format materials (braille, large print, electronic files,
   and audio format):

   202-418-0531 (voice), 202-418-7365 (tty).

   VI. ORDERING CLAUSES

   13. IT IS ORDERED that a copy of this Citation shall be sent both by First
       Class U.S. Mail and Certified Mail, Return Receipt Requested to Mr.
       David R. Carley, Chief Operating Officer, Hobby Lobby International,
       Inc., 5614 Franklin Pike Cir., Brentwood, TN 37027-4324.

   FEDERAL COMMUNICATIONS COMMISSION

   Kathryn S. Berthot

   Chief, Spectrum Enforcement Division

   Enforcement Bureau

   47 U.S.C. S: 503(b)(5).

   47 U.S.C. S: 302a(b).

   47 C.F.R. S: 2.803(a)(1).

   The JETI Duplex 2.4 GHz System consists of a transmitter and receiver used
   for remote control of model aircraft, boats, and cars.

   See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division,
   Enforcement Bureau, Federal Communications Commission, to Mark Cleveland,
   President, Hobby Lobby International, Inc. (March 1, 2010).

   See Letter from David R. Carley, COO, Hobby Lobby International, to
   Kathryn S. Berthot, Chief, Spectrum Enforcement Division, Enforcement
   Bureau, Federal Communications Commission (April 7, 2010) ("LOI
   Response").

   See id. at 1.

   See id.

   OET sent a letter to HLI inquiring about the JETI System in May 2009. See
   Letter from Ray LaForge, Chief, Auditing and Compliance Branch, Office of
   Engineering and Technology (May 19, 2009). In its response to the
   Enforcement Bureau's LOI, HLI claims that it sent information about the
   JETI System to OET in June 2009. HLI stated that the lawyer that it
   retained to respond to that letter is no longer available to HLI, and HLI
   does not have access to the response he submitted at that time on HLI's
   behalf. HLI, nevertheless, included as an attachment to its LOI Response a
   Declaration from David R. Carley dated May 31, 2009, which it claims was
   submitted along with its response to the inquiry from OET. See LOI
   Response, Declaration of David R. Carley (dated May 31, 2009). OET,
   however, has no record of receiving a response from HLI to its May 19,
   2009 letter.

   See LOI Response, Declaration of David R. Carley. See also n. 10 supra.

   We note that HLI's LOI Response refers to the JETI System (which consists
   of a transmitter and receiver), while the Declaration refers just to the
   JETI transmitter module.

   See LOI Response, Declaration of David R. Carley.

   See id.

   See id.

   See id.

   See id. Mr. Carley also indicated in his Declaration that HLI intended to
   seek FCC approval for the JETI System. See id. However, based on a review
   of the relevant FCC database and by HLI's own admission, the JETI System
   has never been authorized. We note that a similarly named device is still
   featured on HLI's website, though it does not appear that it is presently
   available for purchase. See http://www.hobby-lobby.com/jeti-duplex.htm
   (last visited November 22, 2010).

   47 U.S.C. S: 302a(b).

   47 C.F.R. S: 2.803(a)(1).

   47 C.F.R. S: 15.201(b).

   Section 15.3(o) of the Rules defines an "intentional radiator" as a
   "device that intentionally generates and emits radio frequency energy by
   radiation or induction." 47 C.F.R. S: 15.3(o).

   47 C.F.R. S: 2.803(e)(4).

   See 47 U.S.C. S:S: 401, 501, 503; 47 C.F.R. S: 1.80(b)(3). This amount is
   subject to further adjustment for inflation (see id. S: 1.80(b)(5)), and
   the forfeiture amount applicable to any violation will be determined based
   on the statutory amount designated at the time of the violation.

   See 47 U.S.C. S: 510.

   See Privacy Act of 1974, 5 U.S.C. S: 552a(e)(3).

   See 18 U.S.C. S: 1001 et seq.

   47 C.F.R. S: 1.17 ("... no person subject to this rule shall; (1) In any
   written or oral statement of fact, intentionally provide material factual
   information that is incorrect or intentionally omit material information
   that is necessary to prevent any material factual statement that is made
   from being incorrect or misleading; and (2) In any written statement of
   fact, provide material factual information that is incorrect or omit
   material information that is necessary to prevent any material factual
   statement that is made from being incorrect or misleading without a
   reasonable basis for believing that any such material factual statement is
   correct and not misleading.")

   (...continued from previous page)

                                                              (continued....)

   Federal Communications Commission DA 10-2220

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   Federal Communications Commission DA 10-2220