September 25, 2001

DISSENTING STATEMENT OF COMMISSIONER KEVIN J. MARTIN

*Re: Request for Stay of Order in Liberty Productions, A Limited
Partnership, FCC 01-129, MM Docket 88-577.*

I respectfully dissent from the denial of a stay of *Liberty
Productions*, FCC 01-129. In this instance, I believe a stay is
justified given the petitioner's substantial likelihood of success upon
the merits, as well as a balancing of the relevant harms. I am concerned
that the Commission has failed to give enough deference to the findings
of the Administrative Law Judge who took the testimony in this case. I
also believe the Commission has given insufficient attention to the
potential inequity to the current broadcaster, Orion Communications,
Ltd., if it fails to issue a stay in this 11-year proceeding.

I. PROCEDURAL HISTORY

On May 4, 1990, an Administrative Law Judge granted, under comparative
criteria, the application of Orion, an entity controlled by Zebulon Lee,
for a new FM station at Biltmore Forest, North Carolina. In that
decision, the ALJ disqualified Liberty Productions, a mutually exclusive
applicant, finding that Liberty principals had intentionally
misrepresented the availability of the tower site. The ALJ concluded
that

> \[t\]he record clearly justifies the conclusion that when Valerie
> Klemmer (a Liberty principal) represented to the Commission that
> Liberty had available the transmitter site specified in their
> application, she had absolutely no basis for doing so. Moreover, she
> knew she had no basis for doing so.

*National Communications Industries*, 5 FCC Rcd 2862, 2879 (1990). The
ALJ conditioned grant of the application on divestiture of the Lee
Family's only other broadcast radio interest, which was located in the
same market as the Biltmore Forest FM station. *Id.* at 2881. The Review
Board upheld the ALJ's decision following a *de novo* review of the
record evidence. *National Communications Industries*, 6 FCC Rcd 1978
(Rev. Bd. 1991). The Commission, too, upheld the ALJ's determination
that Liberty was not basically qualified. *National Communications
Industries*, 7 FCC Rcd 1703 (1992). Thus, three separate reviews
concluded that Liberty was not qualified to own a license. The Lee
family then divested its other radio station, as required by the ALJ's
Order, and commenced operation of the Biltmore Forest Station.

Liberty (among other losing applicants) appealed the Commission decision
to the U. S. Court of Appeals for the District of Columbia Circuit.
While this appeal was pending, the D.C. Circuit decided in an unrelated
case that the Commission's application of the integration criterion to
comparative hearings was arbitrary and capricious. *Bechtel v. FCC*, 10
F.3d 875 (D.C. Cir. 1993).[^1] The D.C. Circuit, however, did not
overturn the Commission's character policy, which has long held that an
applicant who intentionally misrepresents facts on an application lacks
the character qualifications to be a Commission licensee. Nor did the
court reach any other issue relevant to this case. *See, e.g., Policy
Regarding Character Qualifications in Broadcast Licensing*, 102 FCC 2d
1179 (1986). In light of *Bechtel*, the D.C. Circuit remanded all
comparative proceedings before the D.C. Circuit---including the
underlying case at issue here---to the Commission for further
consideration, and ordered that all other pending comparative hearings
before the Commission be resolved consistent with the D.C. Circuit's
holding. On February 25, 1994, the Commission announced that it would
"hold\[\] in abeyance the processing of applications and the
adjudication of hearing proceedings" while it determined how to
implement the D.C. Circuit's order. *Public Notice, FCC Freezes
Comparative Proceedings*, 9 FCC Rcd 1055 (released February 25, 1994).

During this period, Orion, which had begun the process of building out
the station at Biltmore Forest, was eventually awarded interim operating
authority, as well. *Orion Communications Ltd. v. FCC*, 131 F.3d 176,
181 (D.C. Cir. 1997).

Approximately a year following the award of interim operating status,
the Commission adopted a new method for awarding licenses to resolve all
the pending comparative cases: a competitive bidding procedure.
*Implementation of Section 309(j) of the Communications Act --
Competitive Bidding for Commercial Broadcast and Instructional
Television Fixed Services Licenses*, 13 FCC Rcd 15920 (1998), *recon
denied*, 14 FCC Rcd 8724 (1999), *aff'd sub nom*, *Orion Communications,
Ltd. v. FCC*, 213 F.3d 761, *mem.*, 221 F.3d 196 (D.C. Cir. 2000). In
determining how to resolve the pending Biltmore Forest case at issue
here, the Commission decided to auction the construction permit first
and then, if necessary, resolve any qualifications issues involving the
winning bidder. *Liberty Productions*, FCC 99I-11 (Released May 12,
1999). This was the only case in which the Commission permitted a party
who had been found lacking in basic character qualifications
nevertheless to participate in the auction.

The auction closed in October of 1999 with Liberty as the highest
bidder. The Commission then addressed Liberty's qualifications,
revisiting the decision of the ALJ that Liberty had made intentional
misrepresentations to the Commission. Now, more than ten years after the
ALJ assessed the evidence and credibility of the witnesses first-hand
and concluded that Liberty had engaged in intentional deceit and did not
have a site available---and several years after both the Review Board
and the Commission affirmed that ALJ's decision---the Commission
concluded that the ALJ's finding was not supported by substantial
evidence. *Liberty Productions*, FCC 01-129, ¶55 (Released May 25,
2001). This new conclusion conflicted with the finding of the ALJ years
before, and with the specific testimony the Review Board had previously
credited. It, however, paved the way for the Commission to grant
Liberty's application.

II. STANDARD

As noted by the majority, determination of whether a stay is appropriate
must be based on a balancing of four factors: (1) the likelihood that
the parties seeking a stay will prevail on the merits of their appeal;
(2) the likelihood that the moving party will be irreparably harmed
absent a stay; (3) the prospect that others would be harmed if a stay is
granted; and (4) the public interest in granting a stay. *Wisconsin Gas
Co. v. FERC*, 758 F.2d 669, 673-674 (D.C. Cir. 1985), *citing Virginia
Petroleum Jobbers Ass'n v. FPC*, 259 F.2d 921, 925 (D.C. Cir. 1958).
"The traditional stay factors contemplate individualized judgements in
each case," and "the formula cannot be reduced to a rigid set of rules."
*Standard Havens Products v. Genco Industries*, 897 F.2d 511, 512 (Fed.
Cir. 1990), *citing*, *Hilton v. Braunskill*, 481 U.S. 770, 777 (1987)
"In considering whether to grant a stay pending appeal, \[a\] court
assesses \[the\] movant's chances for success on appeal and weighs the
equities as they affect the parties and the public." *Standard Havens
Products v. Genco Industries,* 897 F.2d at 513, *citing, E.I. Dupont De
Nemours and Company v. Phillips Petroleum Company*, 835 F.2d 277, 278
(1987).

III. ORION HAS A SUBSTANTIAL LIKELIHOOD OF SUCCESS ON THE MERITS

In evaluating the likelihood of success on appeal, the petitioner need
"not establish an absolute certainty of success." *Iowa Utilities Board
et al v. Federal Communications Commission*, 109 F.3d 418, 423 (8^th^
Cir. 1996), *citing*, *Population Institute v. McPherson*, 797 F.2d
1062, 1078 (D.C. Cir. 1986). Rather, as the plain language of the test
indicates, a petitioner need only demonstrate that success is "likely"
on the merits. As discussed below, I believe that a substantial
likelihood of success exists.

First, the Commission took the highly unusual step of reviewing the
record evidence relating to an issue that was not part of the D.C.
Circuit's remand decision. As explained *supra*, the D.C. Circuit
remanded this case as one of many before the court that involved
comparative hearings, with instructions to the Commission to review its
decisions in light of the court's finding that an aspect of the FCC's
comparative hearing process was arbitrary and capricious. The Commission
in this case, however, reconsidered not just the aspects relating to the
comparative hearing process, but also the findings relating to
character. This step was odd for several reasons. First, the D.C.
Circuit had not addressed the Commission's longstanding character
policy, and thus it was not at issue. Second, the ALJ's finding with
respect to character was an important factor in the ALJ's decision that
Liberty was not qualified to own a license, and the evidence relating to
Liberty's misrepresentation was the basis for the determination that no
site was available. That decision, and the reliance upon testimony that
explicitly contradicted Liberty's sworn testimony, had been affirmed by
both the Review Board and the Commission. Third, the Commission's
revisiting of the character issue required assessing the credibility of
witnesses in testimony collected by the ALJ, in person, over ten years
ago. Fourth, this was the only case in which the Commission permitted a
party who had been found lacking in basic character qualifications to
participate in the auction.

Yet, the Commission's action was not merely unusual, it also was
unsupported by precedent. No specific authority justifies the
Commission's new review of an ALJ's findings when those findings formed
the basis of a decision that ultimately was affirmed by both the Review
Board and the Commission. There can be no question that the ALJ's
finding that there was no site availability---the issue upheld by the
Review Board and the Commission---was based on the ALJ's determination
that Liberty lied when it said it had a site available.

The Commission alleges that a new review of the ALJ's findings was
warranted because the Review Board and the previous Commission had
failed to make specific findings with respect to the ALJ's conclusion
that Liberty had misrepresented site availability. *Liberty
Productions*, FCC 01‑129, ¶¶ 50‑51. Yet, the Review Board and Commission
did find that there was no site available, which necessarily discredited
Liberty's sworn testimony. Indeed, the Review Board made a specific
factual finding crediting the very testimony upon which the ALJ based
his finding of misrepresentation:

> The ALJ found that Liberty never had reasonable assurance that the
> site which it specified in the application was available, and that its
> principal falsely certified that the transmitter site was available
> because "she had absolutely no basis for doing so. Moreover, she knew
> she had no basis for so certifying." His findings and conclusions were
> based on the verified statement and deposition testimony of the site
> owner. Her testimony was in turn corroborated by the fact that other
> applicants who \[\] sought permission to use the land were required to
> enter into a written lease...*Like the ALJ, we find no reason in the
> record to reject the firm denial of the site owner that she had ever
> given assurance to Liberty that the property would be available,
> especially where twice before she had insisted on written agreements.*

*National Communications Industries*, 6 FCC Rcd at 1979 (Review Board
1991)(emphasis added). *See, also,* *National Communications
Industries*, 7 FCC Rcd at 1704 (Commission affirming the ALJ's
conclusion that Liberty was not basically qualified to be a Commission
licensee). Thus, both the Review Board and the Commission made findings
that credited the testimony of the witnesses upon which the ALJ's
finding of misrepresentation was based---findings that could not have
been made without discredited Liberty's testimony. The Review Board,
moreover, specifically discrediting Liberty's testimony by finding "no
reason in the record" to reject the site owner's testimony.

The Commission should have deferred to these findings. Instead, it
appears that the Commission reweighed the record evidence. This is
particularly troubling since the initial trier of fact had taken the
testimony and released a decision approximately ten years earlier. The
Commission routinely defers to the ALJ's factual findings on matters of
credibility. As Commissioner Tristani noted in her dissent to the
underlying decision,

> *De novo* review is not trial *de novo.* Thus, while *de novo* review
> authorizes a review of the whole record without deference to facts
> found by the ALJ, there can be no doubt that our law universally
> favors disposition of credibility and motive by the person or body
> that hears the testimony.

*Dissenting Statement of Gloria Tristani*, *Liberty Productions*, FCC
01-129.

The Commission, in arguing that the ALJ's findings were entitled to no
deference in this instance, claimed that the ALJ failed to make specific
credibility findings. *Liberty Productions*, FCC 01-129, ¶20. This
assertion is incorrect. The ALJ found that Liberty's arguments "strained
credulity." *National Communications Industries*, 5 FCC Rcd at 2879.
Moreover, the ALJ found that she "blatantly dissembled in a manner" not
befitting a Commission licensee. One can easily infer from such findings
that the ALJ did assess the credibility of the Liberty witness before
him. Moreover, there is no general requirement that the ALJ make a more
specific credibility finding. Without such a requirement, the
Commission's decision to reverse a prior Commission affirmance of the
ALJ's conclusions seems problematic.

The Commission's analysis of the record evidence also raises additional
questions. For instance, the Commission stated that substantial evidence
did not support a finding of deceit on the part of Liberty. However, the
Commission has long held that "the fact of misrepresentation coupled
with proof that the party making it had knowledge of its falsity \[is\]
enough to justify a conclusion that there was fraudulent intent."
*Leflore Broadcasting* *Co.* *v. FCC*, 636 F.2d 454, 462 (1980). The
Commission admits that there existed a "direct conflict" between the
testimony of the site owner and Liberty principals supporting the
conclusion that Liberty had intentionally misrepresented the
availability of a site. *Liberty Productions*, FCC 01-129, ¶66. The ALJ
had before him the deposition testimony of the site's owner who
testified both that she never intended to lease the site to Liberty, and
that any applicant interested in the site would have had to sign a
written lease. He also had heard, in person, the testimony of the very
Liberty principals he found not to have been credible. Moreover, the
site owners' testimonial evidence was supported by what the Commission
again termed "admittedly troublesome" documentary evidence. *Id.,* ¶71.
The Commission stated that "\[i\]t is somewhat problematic that \[the
site owner\], having just signed a lease providing for up-front payments
before the license was awarded, would have been willing to consider
leasing \[to the Liberty principal\] a portion of her property for the
same purpose without requesting a similar monetary commitment." *Id.* In
light of the evidence available to the ALJ and the conclusions drawn
therefrom, and the Commission's recognition of these factors, it is
uncertain what additional quantum of evidence would have been necessary
to prove intentional deceit in this or any case.

Finally, when reviewing the ALJ's finding of intentional
misrepresentation with respect to site certification, the Commission
refused to consider whether Liberty exhibited a *pattern* of
misrepresentation. Misrepresentation issues also were raised with regard
to three other issues: Liberty's failure to attach a family media
interest certification to its original short-form application; its
erroneous claim of a new entrant bidding credit; and its failure to
disclose various ownership relationships. While *intentional*
misrepresentation may not have been found with respect to each of these
factually inaccurate statements, the Commission should have assessed
whether these inaccurate statements---in conjunction with the findings
of the ALJ regarding *intent* to deceive on the site certification
issue---raised a substantial question as to whether a pattern of
misrepresentation existed.

IV. ORION WILL BE IRREPARABLY HARMED IF A STAY IS NOT GRANTED IN THIS
    CASE

"The basis for injunctive relief...has always been irreparable harm and
inadequacy of legal remedies." *Sampson v. Murray*, 415 U.S. 61, 88
(1974). Courts have consistently found that denial of a stay will result
in irreparable harm if it leads to the loss of an ongoing business.
*Washington Metropolitan Area Transit Commission v. Holiday Tours,
Inc.,* 559 F.2d 841, 843 (D.C. Cir. 1977); *Wisconsin Gas Company v.
Federal Energy Regulatory Commission*, 758 F.2d 669, 673 (D.C.
Cir.1985). In this instance, failure to grant a stay will result in the
complete loss of the Lee family's broadcast business. Zebulon Lee had
run station WSKY-AM in Asheville, North Carolina for 46 ears, during
which time he had become a well-recognized member of the broadcast
establishment of western North Carolina. Relatives of Zebulon Lee played
integral roles in the operation of WSKY-AM, and these same family
members have also assisted in running the Biltmore Forest station. This
case is especially troublesome since the Lees divested station WSKY-AM
only as a result of a condition placed on the grant of the Biltmore
Forest application. Under these circumstances, denying the stay will
result in irreparable harm to the Lees by denying them the opportunity
to continue operating their only remaining station as an ongoing
business.

V.  LIBERTY'S ECONOMIC LOSS DOES NOT JUSTIFY DENYING A STAY

As noted by the majority, Liberty stands to incur substantial interest
charges should the stay be granted. These charges, Liberty claims, will
remain unpaid until it receives advertising revenue. Courts, however,
have long held that economic loss, in and of itself, does not constitute
irreparable harm unless it threatens the very existence of an ongoing
business. *Washington Metropolitan Area Transit Commission v. Holiday
Tours, Inc.,* 559 F.2d at 843; *Wisconsin Gas Company v. Federal Energy
Regulatory Commission*, 758 F.2d at 673. There is no indication that
incurring these interest charges would threaten the very existence of
Liberty, or that the loss could not be recoverable in the future. *Iowa
Utilities Board et al v. Federal Communications Commission*, 109 F.3d at
425 (Revenues and customers lost to competition which can be regained
through competition are recoverable). Indeed, given the financial
backing of Cumulus Broadcasting, Inc., it is unlikely that any loss due
to lack of advertising revenues during the stay period will threaten the
existence of Liberty's ongoing business. However, grant of the stay will
result in the complete loss of the Lee family's broadcast business. In
light of these unique facts, it seems reasonable to stay the expiration
of interim operating status until the Commission determination is final.

VI. THE PUBLIC INTEREST FAVORS GRANTING A STAY IN THIS INSTANCE

The public interest will be served by granting a stay in this limited
instance. Those that "played by the rules" when comparative hearings
were the order of the day should not be unduly harmed simply because the
Commission decided to resolve such cases under a system of competitive
bidding. In particular, Orion acted in reliance upon specific Commission
dictates.

I do not believe that expediting the selection of a licensee for
Biltmore Forest provides a sufficient public interest justification for
denying a stay. Rather, by ensuring that Orion is not unduly harmed, the
Commission will better preserve the integrity of the competitive bidding
system.

VII. CONCLUSION

I find it problematic that the Commission revisited an ALJ's finding to
disqualify an applicant on character issues when a previous Commission
had already affirmed the ALJ's basic decision that no site was
available. It also is troubling that the Commission performed a new
review of the ALJ's character findings when the case was remanded to the
Commission on issues not involving our character policy. Because of
these irregularities, as well as the manner in which the Commission
reviewed the ALJ's findings, I believe there exists a substantial
likelihood that Orion will succeed on the merits of this case. I further
believe that the Lee family will suffer irreparable harm if a stay is
not granted, particularly because the Lees divested their only other
station in order to own and operate the station at issue here. Moreover,
the grant of a stay will cause Liberty only a temporary economic loss.
Consequently, a balancing of the equities clearly favors Orion over
Liberty, and I believe granting the stay would be appropriate.

[^1]: The integration criterion gave credit to those applicants who
    promised to integrate ownership with the management of a broadcast
    station.