Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-00-01089/USCOURTS-caDC-00-01089-0/pdf.json

Parties Involved:
Biltmore Broadcasting, LLC
Intervenor
Federal Communications Commission
Appellee
John D. Huddy
Appellant

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 5, 2000 Decided January 19, 2001

No. 00-1089

John D. Huddy,

Appellant

v.

Federal Communications Commission,

Appellee

Biltmore Broadcasting, LLC,

Intervenor

Appeal of an Order of the

Federal Communications Commission

Gene A. Bechtel argued the cause and filed the briefs for

appellant.

Roberta L. Cook, Counsel, Federal Communications Commission, argued the cause for appellee. With her on the brief

were Christopher J. Wright, General Counsel, and Daniel M.

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Armstrong, Associate General Counsel. Gregory M. Christopher, Counsel, entered an appearance.

Daniel E. Troy argued the cause for intervenor Biltmore

Broadcasting, LLC. With him on the brief were Richard J.

Bodorff and E. Joseph Knoll III.

Before: Williams, Ginsburg and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Williams.

Williams, Circuit Judge: John D. Huddy petitions for

review of a Federal Communications Commission decision

denying his request for a hearing on his challenges to the

assignment of a television broadcast license. We dismiss for

lack of standing.

Huddy is the sole shareholder of Riklis Broadcasting Corporation, the former owner and licensee of TV station KADY.

In July 1996 Riklis entered involuntary bankruptcy and a

trustee was appointed to manage the corporation's estate.

The FCC consented to an involuntary transfer of the KADY

license to the trustee, who proceeded to auction off the

station. John Cobb emerged as the highest bidder. On the

trustee's endorsement of his creditworthiness, the bankruptcy

court approved the sale. Cobb assigned his purchase rights

to Biltmore Broadcasting, of which he is the controlling

principal.

In November 1997 Biltmore applied for FCC approval of

assignment of the license. Huddy filed a petition asking for a

hearing, claiming that Cobb had falsely certified his financial

qualifications to the FCC. In support, he asserted that in a

phone conversation Cobb had said that he hadn't yet secured

funding for the purchase. Cobb responded that Huddy misunderstood his remarks and that he told Huddy only that he

had not chosen which of various means of financing he would

use. Cobb also struck back, alleging that during the same

call Huddy threatened to oppose Cobb's license application

unless the latter assisted Huddy in his claims against the

Riklis bankruptcy estate. Huddy later added a charge that

Cobb had assumed control of KADY before FCC approval of

the transfer, in violation of Commission rules. The trustee

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answered with an affidavit saying that in the relevant period

he (the trustee) had controlled all business decisions at

KADY.

The FCC ultimately approved the assignment, and on July

1, 1998 the purchase of the television station was consummated. After twice petitioning the FCC to rethink its decision

and each time being rebuffed, Huddy sought review here.

To be heard on the merits Huddy must first satisfy the

three elements of constitutional standing: injury in fact,

causation, and redressability. See Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560-61 (1992). These elements roughly correspond to the following questions: has Huddy asserted

a present or expected injury that is legally cognizable and

non-negligible, did the agency's actions materially increase

the probability of injury, and will the remedy sought compensate Huddy or materially reduce the expected harm? To

satisfy these requirements Huddy asserts two interests--one

as a viewer of KADY and the other as a residual claimant of

the bankruptcy estate who would benefit financially if the

KADY license were returned to the trustee and re-auctioned.

We address each claim in turn.

As a resident of the service area and a viewer of the

station, Huddy can assert a possible injury to a legally

protected interest. Under our precedents listeners or viewers may serve as "spokesmen" for a station's entire audience.

See Office of Communication of the United Church of Christ

v. FCC, 359 F.2d 994, 1002 (D.C. Cir. 1966).

But Huddy's theory breaks down on causation. At best he

raises concerns about Cobb's integrity with respect to the

Commission's rules regarding future licensees' behavior in

financial matters and to pre-acquisition station control. But

he makes no effort to link these business behavior issues with

plausible predictions about Cobb's likely programming decisions. To be sure, in the interests of "preserv[ing] the

integrity" of its operations, FCC v. WOKO, Inc., 329 U.S. 223,

228 (1946); see also id. at 226 (noting Commission authority

under 47 U.S.C. s 312(a)), the Commission is entitled to

consider a would-be licensee's deceptive behavior as grounds

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for rejecting an application, id., and even to make denial of a

license virtually automatic on evidence of intentional misrepresentations in license applications, see, e.g., In re Opal

Chadwell, Dorothy O. Schulze and Deborah Brigham, Blanco

Communications, Ltd., 2 FCC Rcd. 5502 at p 14 (1987).

Presumably the Commission adopts such sanctions in the

interests of good broadcasting--i.e., where it believes they

will have a sufficiently favorable effect on broadcasting, in the

long run, to justify the various costs of imposing them. But

the run may be long indeed. So the authority of the Commission to apply such sanctions doesn't ipso facto support an

inference that FCC underenforcement of financial integrity

policies is likely to cause the sort of "material impairment of

[a viewer's] hopes or expectations" that is needed to support

standing. Jaramillo v. FCC, 162 F.3d 675, 677 (D.C. Cir.

1998).

Indeed, we've already held that the Commission's failure to

inflict pecuniary penalties on a licensee for an isolated breach

of the Commission's program-related requirements does not

increase the probability of future violations enough to afford a

listener standing to insist that it pursue those penalties.

Branton v. FCC, 993 F.2d 906, 909 (D.C. Cir. 1993). Huddy's

claim is, of course, stronger in the sense that the relief sought

would knock out Cobb altogether. But it is weaker in that

Huddy shows no logical link between the FCC's overlooking

Cobb's alleged business misconduct and a materially increased risk that KADY's programming will not advance the

public interest. Rather than offer some affirmative reason to

think that FCC neglect of Cobb's alleged improprieties materially increases the risks of harm to listeners, Huddy relies

only on the always available supposition that it just might. If

that were enough to show standing, listeners could always

challenge any underenforcement of any license-related provision of communications law. Jaramillo, 162 F.3d at 677.

Huddy's theory here is quite a stretch from prior cases

allowing listener standing. In United Church of Christ, for

instance, listeners sought denial of license renewal on the

ground that a TV licensee had failed to "give a fair and

balanced presentation of controversial issues, especially those

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concerning Negroes," and thus violated the Fairness Doctrine, 359 F.2d at 998-99, 1000, a (now-defunct) Commission

policy expressly directed at broadcasting content. See Syracuse Peace Council v. FCC, 867 F.2d 654 (D.C. Cir. 1989).

And in Llerandi v. FCC, 863 F.2d 79 (D.C. Cir. 1988),

listeners challenged FCC approval of a license assignment

that allegedly violated the Commission's (since-modified)

"duopoly" rule prohibiting common ownership of two stations

whose signals overlap, a rule aimed at enhancing "diversification of viewpoints." Id. at 85. In these cases, FCC underenforcement of rules aimed at quality or diversity of program

content left a station in the control of a party that allegedly

violated such rules.

To bolster his claim Huddy argues that Cobb breached a

promise to add a news program to the KADY schedule. To

Huddy this is evidence that Cobb will not serve the public

interest. Had Cobb made such a promise in an effort to

induce favorable action by the Commission, we might agree.

But in fact Cobb made no such promise. He simply responded to Huddy's allegation that he had exercised premature

control, explaining that in his contacts with the KADY staff

he had sought to explore the possibility of launching a newscast after the FCC approved his application. Cobb made no

commitment to the FCC or to KADY viewers.

Huddy points out that Cobb had KADY's rating market

changed from Santa Barbara to Los Angeles in January 2000,

evidently to enable it to force cable companies in Los Angeles

to carry its signal. This change was possible only with the

approval of the Commission after it considered the effect on

local programming. See In re Comcast Cablevision of Santa

Maria, Inc., 13 FCC Rcd. 24,192 at p p 3, 14-17 (1998)

(applying standards specified in 47 U.S.C. s 534(h)(1)(C)).

Huddy alleges no illegality in that process. In any event, the

fact that the change originated with action by Cobb does

nothing to overcome Huddy's failure to offer evidence, or

even a theory, as to how an alleged lack of candor on financial

matters might increase the likelihood of market switches that

injure listeners.

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Huddy's second theory of standing begins with the observation that KADY is more valuable today than when Biltmore

purchased it. Here Huddy turns, surprisingly, to the very

fact previously invoked to show Cobb's programming treachery, namely his securing Commission approval to shift

KADY's market to Los Angeles, with prospects of more

lucrative cable carriage. He also says that when the FCC

changed its "television duopoly rules" in August 1999 to allow

common ownership of more than one local commercial television station in the same market, the value of stations in all big

markets jumped. In the Matter of Review of the Commission's Regulations Governing Television Broadcasting, 14

FCC Rcd. 12,903 (1999). Huddy argues that if this court

were to remand to the FCC for a hearing on Cobb's integrity,

and if the FCC were to revoke Biltmore's license, and if the

trustee were to re-auction KADY, Huddy would profit as a

residual claimant of the Riklis bankruptcy estate. Although

Huddy's counsel seemed to abandon this second theory of

standing at oral argument, we include a brief treatment to

dispel any belief that it might hold water.

First, the injury to Huddy is (at most) the result of Cobb's

alleged lack of candor only in a narrow "but for" sense.1 Yes,

had Cobb not acquired the station, he would not have been

able to switch KADY's market. And yes, had the FCC not

changed its rules since the bankruptcy sale, the station's

market value would not have benefited from the rule change.

But there is nothing inherent in the FCC's slack policing of

its rules on candor about financial resources or on when a

buyer may first exercise control, that tends to bring about the

kinds of increases in station value that Huddy asserts. See

__________

1 We say "at most" because even "but for" causation is questionable (apart from the issue discussed in the text below--whether

Commission rejection of Biltmore's application would have led to a

new auction). The FCC did not change its duopoly rules for

another 16 months after its approval of the transfer. Had its

decision been the other way, a new auction might well have been

completed before the rule change was made or the prospect of its

adoption apparent, and Huddy would not have garnered his windfall.

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Movitz v. First National Bank of Chicago, 148 F.3d 760, 762-

63 (7th Cir. 1998); see also United States v. Dyer, 216 F.3d

568, 570-71 (7th Cir. 2000). Huddy seems implicitly to

recognize the lack of any inherent tendency of the FCC's

alleged error to produce the alleged injury, identifying the

causal link simply as the passage of time since the FCC's

action, coupled with two fortuities, Cobb's strategic decision

and the Commission's rule change. Reply Br. at 6-7.

We question whether "but for" causation of this sort could

ever be sufficient to confer constitutional standing. Certainly

Huddy does not point to any standing decision that finds a

causal relation based on merely the passage of time and an

accompanying change of market conditions. And acceptance

of such "but for" causation would effectively enable parties to

secure constitutional standing purely at their own volition.

Suppose that two persons, without interests at stake in an

agency process, had bet a sum of money on its outcome. If

"but for" causation of the kind involved here were enough, the

party picking the losing side would satisfy the causation

prong, and, unless the wager were illegal, standing would

ensue. It seems improbable that the Court intends all its

learning on constitutional standing to be so readily evaded.

We need not finally decide whether such "but for" causation can ever be enough, as Huddy has not shown that the

supposed injury could be redressed. As his counsel conceded

at oral argument, the record says nothing on the consequences of an FCC veto of the transfer to Cobb. For all we

know, the trustee in bankruptcy would then be required

simply to award KADY to the next highest bidder in the

original auction. As we have no reason to believe that Huddy

would even reap his desired windfall, he flunks the redressability criterion. Simon v. Eastern Kentucky Welfare Rights

Organization, 426 U.S. 26, 41-43 (1976); Branton v. FCC, 993

F.2d at 911.

As Huddy lacks standing, his petition for review is

Dismissed.

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