Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-02-01347/USCOURTS-caDC-02-01347-0/pdf.json

Parties Involved:
Center for Digital Democracy
Appellant
Consumer Federation of America
Appellant
Consumers Union
Appellant
Federal Communications Commission
Appellee

Document Text:

Notice: This opinion is subject to formal revision before publication in the

Federal Reporter or U.S.App.D.C. Reports. Users are requested to notify

the Clerk of any formal errors in order that corrections may be made

before the bound volumes go to press.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 8, 2003 Decided October 31, 2003

Nos. 02-1337 & 02-1347

CONSUMER FEDERATION OF AMERICA, ET AL.,

PETITIONERS/APPELLANTS

v.

FEDERAL COMMUNICATIONS COMMISSION AND

UNITED STATES OF AMERICA,

RESPONDENTS/APPELLEES

AT&T CORPORATION, ET AL.,

INTERVENORS

On Petition for Review and Notice of Appeal of Orders of the

Federal Communications Commission

Cheryl A. Leanza argued the cause for petitioners/appellants. With her on the briefs were Harold Feld and Andrew

Jay Schwartzman.

 Bills of costs must be filed within 14 days after entry of judgment.

The court looks with disfavor upon motions to file bills of costs out

of time.

USCA Case #02-1347 Document #782186 Filed: 10/31/2003 Page 1 of 8
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Joel Marcus, Counsel, Federal Communications Commission, argued the cause for respondents/appellees. With him

on the brief were R. Hewitt Pate, Acting Assistant Attorney

General, Robert B. Nicholson and Steven J. Mintz, Attorneys,

John Rogovin, Acting General Counsel, and Daniel M. Armstrong, Associate General Counsel.

Arthur J. Burke argued the cause for intervenors Comcast

Corporation, et al. With him on the brief were Dennis E.

Glazer and David L. Lawson. Mark C. Rosenblum entered

an appearance.

Before: EDWARDS, RANDOLPH, and GARLAND, Circuit Judges.

Opinion for the Court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge: This dispute arose during the

Federal Communications Commission’s review of a proposed

merger between AT&T Broadband Corp. (‘‘AT&T’’) and Comcast Corp. The Commission rejected a request from several

consumer groups to place in the record an agreement between AT&T and Time Warner, Inc.1

 The agreement established the terms by which Time Warner’s AOL subsidiary

would provide internet service to customers of the merged

firm. The consumer groups – the Consumer Federation of

America, Consumers Union, and the Center for Digital Democracy – immediately petitioned for judicial review of this

decision. They later filed an appeal in this court from the

Commission’s Order approving the license transfers required

to consummate the merger.

I.

At the time they decided to merge, AT&T was the nation’s

largest cable company, while Comcast was its third largest.

AT&T also owned an interest in Time Warner Entertainment,

L.P. (‘‘TWE’’), a limited partnership with Time Warner and

the nation’s second-largest cable provider. The Commission

may not have approved the merger if the new firm – AT&T

Comcast Corp. – maintained its interest in all three cable

1 Time Warner, Inc., was then known as AOL Time Warner, Inc.

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systems. So the merging parties proposed that, pending an

eventual divestiture, AT&T would insulate its TWE interest

by placing it in an irrevocable trust. The parties executed an

agreement with Time Warner to implement this arrangement

(the ‘‘Restructuring Agreement’’).

In connection with the Restructuring Agreement, the parties also negotiated the agreement at the center of this case –

the AOL ISP Agreement. The AOL ISP Agreement is not in

the record, but the parties agree that it establishes the terms

by which customers of AT&T Comcast would be able to

choose AOL as their internet service provider (‘‘ISP’’). The

parties also agree that the AOL ISP Agreement contains two

additional features. First, the agreement is non-exclusive –

that is, AT&T Comcast could negotiate similar agreements

with other ISPs, giving its customers a choice of providers.

Second, the agreement prohibited AOL from providing

streaming video to AT&T Comcast’s customers.

At the request of the Commission staff, the merging parties

filed the Restructuring Agreement with the Commission.

Initially they withheld its exhibits, the AOL ISP Agreement

among them. The merging parties were reluctant to file the

exhibits wholesale because of their commercially sensitive

nature, and because they did not think the exhibits were

relevant. They asked the Commission staff to review the

exhibits at the Department of Justice, where they had submitted them in connection with the Department’s merger

review process. If the staff identified any particular exhibit

as relevant to the merger, the merging parties would then file

it with the Commission. The staff agreed to this proposal,

reviewed the documents and determined that the AOL ISP

Agreement was not relevant to the Commission’s inquiry.

Meanwhile, the consumer groups learned of the AOL ISP

Agreement through press reports. They filed a motion asking the Commission to force AT&T and Comcast to file the

AOL ISP Agreement and make it part of the administrative

record. The Commission denied the motion, In re Applications for Consent to the Transfer of Control of Licenses from

Comcast Corp. and AT&T Corp. to AT&T Comcast Corp., 17

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F.C.C.R. 22,633 (2002) (‘‘the Motion Order’’), and the groups

petitioned this court for review pursuant to 47 U.S.C.

§ 402(a) and 28 U.S.C. § 2342(1). The following month, the

Commission approved the license transfers required to consummate the merger. In re Applications for Consent to the

Transfer of Control of Licenses from Comcast Corp. and

AT&T Corp. to AT&T Comcast Corp., 17 F.C.C.R. 23,246

(2002) (‘‘the Merger Order’’). The consumer groups appealed

that decision pursuant to 47 U.S.C. § 402(b)(6). We consolidated the petition and the appeal.

II.

There are two preliminary matters. The first deals with

the petition for judicial review. The Motion Order was not a

‘‘final’’ order within the meaning of the Hobbs Act, 28 U.S.C.

§ 2342(1). It did not finally decide whether the Commission

would approve transfer of the licenses and it did not end the

proceedings before the Commission. See Illinois Citizens

Comm. for Broad. v. FCC, 515 F.2d 397, 402 (D.C. Cir. 1975).

While we therefore lack jurisdiction over the petition for

review, and will dismiss it, this is of little consequence.2

 The

Merger Order is appealable under 47 U.S.C. § 402(b)(6), and

the Administrative Procedure Act, 5 U.S.C. § 704, provides

that an agency ‘‘ruling not directly reviewable’’ – such as the

Motion Order – may be reviewed with the final agency action.

The second matter deals with standing. The intervenors –

AT&T, Comcast and Comcast Holdings Corp. – argue that

the consumer groups lack standing. An association has

standing to pursue litigation ‘‘on behalf of its members when

its members would have standing to sue in their own right,

the interests at stake are germane to the organization’s

purpose, and neither the claim asserted nor the relief requested requires members’ participation in the lawsuit.’’

Hunt v. Washington State Apple Adver. Comm’n, 432 U.S.

2 The only practical consequence of the dismissal is that the

United States is no longer a party to this case. Compare 28 U.S.C.

§ 2344 (providing that Hobbs Act action ‘‘shall be against the

United States’’).

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333, 343 (1977). Here no one questions that the consumer

groups meet the last two Hunt conditions. The dispute is

about the first condition – whether any member can establish

individual standing, which requires a showing that the member has suffered (1) injury-in-fact (2) traceable to the Merger

Order (3) that could be redressed by vacating and remanding

the Merger Order. See Tel. & Data Sys., Inc. v. FCC, 19

F.3d 42, 46 (D.C. Cir. 1994). It is enough if just one member

of the groups has standing. City of Waukesha v. EPA, 320

F.3d 228, 235-37 (D.C. Cir. 2003) (per curiam); Nat’l Lime

Ass’n v. EPA, 233 F.3d 625, 636 (D.C. Cir. 2000).

To establish standing, the Consumer Federation of America

submitted a short affidavit from its research director (and

member), Mark Cooper.3

 Cooper asserts that he subscribed

to Comcast’s cable service both before and after the merger.4

He identifies two injuries he suffered as a result of the

Commission’s decision to approve the merger. The first is

that his cable rates have risen since then. While this is

certainly an injury-in-fact, the consumer groups make no

attempt to show how this injury can be traced to the merger

or – much the same thing – how it could be redressed by

undoing the merger. See Tel. & Data Sys., 19 F.3d at 46.

Cooper’s affidavit also states that although he would like to

subscribe to Comcast’s high-speed internet service, he is

deterred by his inability to choose his ISP and by the fact

that Comcast could restrict his access to content. At oral

argument, the intervenors maintained that this is not an

actual injury because Cooper could obtain high-speed internet

access using technologies other than cable. But the inability

of consumers to buy a desired product may constitute injuryin-fact ‘‘even if they could ameliorate the injury by purchasing

3 The Consumer Federation also claims that its Motion to Provide

Information, which was supported by a verifying affidavit, contains

sufficient facts to establish standing. We think not. The Motion

does not mention any actual injuries suffered by particular Consumer Federation members.

4 AT&T Comcast Corp., the entity created by the AT&T-Comcast

merger, has since been renamed Comcast Corp.

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some alternative product.’’ Cmty. Nutrition Inst. v. Block,

698 F.2d 1239, 1247 (D.C. Cir. 1983), rev’d on other grounds,

467 U.S. 340 (1984). We therefore believe Cooper satisfies

the first part of the standing inquiry.

This injury to Cooper may also be fairly traced to the

Commission’s order. When an agency order permits a thirdparty to engage in conduct that allegedly injures a person,

the person has satisfied the causation aspect of the standing

analysis. America’s Cmty. Bankers v. FDIC, 200 F.3d 822,

827-28 (D.C. Cir. 2000); Animal Legal Def. Fund v. Glickman, 154 F.3d 426, 440-43 (D.C. Cir. 1998) (en banc). The

Consumer Federation had requested the Commission to condition the merger on a commitment from AT&T Comcast to

allow unaffiliated ISPs access to its cable system and to

refrain from interfering with content. In rejecting these

demands, the Commission’s order permitted the practices to

exist. This is enough to attribute Comcast’s conduct to the

Commission for standing purposes. It follows that the injury

is also redressable. On remand, the Commission could adopt

the Consumer Federation’s position and force Comcast to

change its practices. Although remand would not entitle

Cooper to such relief, it ‘‘would constitute a ‘necessary first

step.’ ’’ Tel. & Data Sys., 19 F.3d at 47 (quoting Hazardous

Waste Treatment Council v. EPA, 861 F.2d 270, 273 (D.C.

Cir. 1988)). Since Cooper therefore has standing to challenge

the Merger Order, so does the Consumer Federation.

III.

As to the merits, the consumer groups argue that the

Commission could not have properly completed its public

interest review without first examining the AOL ISP Agreement. Their theory focuses on the allegation that several

terms in the Agreement are unfavorable to AOL – particularly the restriction on streaming video. According to the

groups, the fact that AOL agreed to these terms demonstrates that AT&T Comcast would have substantial market

power in the residential broadband market and that it is

likely to use that power to interfere with users’ access to

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content. Therefore, the Commission should not have approved the license transfers without taking this danger into

account, and it could not fully evaluate the danger without

examining the AOL ISP Agreement.

As the Commission points out, both the access of unaffiliated ISPs to cable systems and the power of cable companies to

restrict content are industry-wide problems not specific to

this merger. The Commission has initiated a rulemaking

proceeding to deal with these issues on an industry-wide

basis. See In re Inquiry Concerning High-Speed Access to

the Internet over Cable and Other Facilities, 17 F.C.C.R.

4798 (2002). The Commission’s decision not to address them

in this particular case is consistent with its broad discretion to

choose between rulemaking and adjudication. See Chisholm

v. FCC, 538 F.2d 349, 365 (D.C. Cir. 1976). In SBC Communications, Inc. v. FCC, 56 F.3d 1484, 1491 (D.C. Cir. 1995), we

approved as ‘‘entirely reasonable’’ a similar Commission decision to address industry-wide issues in a separate proceeding,

rather than during the review of an individual merger.

The consumer groups counter that the Commission acted

inconsistently with its decision in the AT&T-MediaOne merger. See In re Applications for Consent to the Transfer of

Control of Licenses and Section 214 Authorizations from

MediaOne, Inc., to AT&T Corp., 15 F.C.C.R. 9816 (2000).

Although the Commission there indicated it would have disapproved the merger if AT&T had not agreed to negotiate

access agreements with unaffiliated ISPs, see id. at 9866-67,

MediaOne is distinguishable from this case, for reasons the

Commission stated. At the time of the MediaOne merger,

ISPs wholly or partially controlled by AT&T and MediaOne

had exclusive relationships with several of the nation’s largest

cable systems. Id. at 9826-27. Thus, that merger may have

threatened the viability of other, unaffiliated ISPs. Here, the

merging parties have negotiated nonexclusive agreements

with numerous independent ISPs, including AOL. Merger

Order, 17 F.C.C.R. at 23,296-97.

Of course, the consumer groups have the right to try to

persuade the Commission to change its policy and condition

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the merger on open access for unaffiliated ISPs. If they

needed the AOL ISP Agreement to make that argument,

perhaps the Commission would have erred in excluding it.

But the groups’ Petition to Deny fully explicated the case for

open access without ever referring to the AOL ISP Agreement, let alone indicating that its exclusion hampered their

ability to make their case. In fact, at oral argument, the

groups could not point to one argument that the Commission’s decision to exclude the Agreement prevented them

from making. Similarly, the Commission rejected the groups’

arguments without regard to the contents of the AOL ISP

Agreement. Thus, the decision to exclude the Agreement

from the record could not have affected the outcome of the

proceeding. It was at worst harmless error. See E. Carolinas Broad. Co. v. FCC, 762 F.2d 95, 104 (D.C. Cir. 1985).

The consumer groups also claim that numerous procedural

errors infected the Commission’s decision to exclude the

Agreement from the record. Since we uphold the Commission’s decision to disregard the Agreement, the mere placement of the Agreement in the administrative record could not

have changed the outcome of this case.

Because the FCC’s action ‘‘resulted from consideration of

the relevant factors and the agency has not succumbed to a

clear error of judgment, its decision must be upheld.’’ SBC

Communications, 56 F.3d at 1490 (citations and quotation

marks omitted). The petition for review is dismissed, and

Commission’s decision to approve the license transfers is

affirmed.

So ordered.

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