Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-10-01151/USCOURTS-caDC-10-01151-0/pdf.json

Parties Involved:
Glenn Cherry
Appellant
Federal Communications Commission
Appellee
Scott Savage
Intervenor for Respondent

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 8, 2011 Decided April 12, 2011

No. 10-1151

GLENN CHERRY,

APPELLANT

v.

FEDERAL COMMUNICATIONS COMMISSION,

APPELLEE

SCOTT SAVAGE, RECEIVER FOR TAMA BROADCASTING, INC.,

INTERVENOR

Appeal of Orders of the Federal Communications

Commission

Dennis J. Kelly argued the cause and filed the briefs for

appellant.

Stewart Block, Counsel, Federal Communications

Commission, argued the cause for appellee. With him on the

brief were Austin C. Schlick, General Counsel, Peter Karanjia,

Deputy General Counsel, and Richard K. Welch, Acting

Associate General Counsel.

Mark J. Prak, Julia C. Ambrose, and Eric M. David were on

the brief for intervenor.

USCA Case #10-1151 Document #1302778 Filed: 04/12/2011 Page 1 of 9
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Before: SENTELLE, Chief Judge, TATEL, Circuit Judge, and

EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

EDWARDS, Senior Circuit Judge: In September 2008, as

part of a judicial foreclosure action brought against Tama

Broadcasting, Inc. (“Tama”) by its creditor, D.B. Zwirn Special

Opportunities Fund, L.P. (“Zwirn”), the Supreme Court of the

County of New York granted Zwirn’s request for the

appointment of a receiver to take control of Tama’s assets.

Pursuant to 47 U.S.C. § 310(d), the receiver then sought

approval from the Federal Communications Commission

(“FCC” or “Commission”) for the involuntary assignment of

nine radio broadcast licenses from Tama to the receiver. The

Audio Division of the FCC’s Media Bureau (“Media Bureau”)

approved the assignment applications in February 2009.

Appellant Glenn Cherry, a shareholder and former chief

executive officer of Tama, then filed an application for review

with the Commission, challenging the Media Bureau’s approval

of the assignment applications. The Commission dismissed the

application for review, finding it both procedurally defective and

substantively without merit. Tama Radio Licenses of Tampa,

Fla., Inc. (“Tama Radio”), 25 FCC Rcd. 7588 (June 1, 2010).

Cherry now appeals the Commission’s decision.

We dismiss Cherry’s appeal because he lacks Article III

standing. Cherry alleges that, because of the involuntary

assignment of the radio broadcast licenses from Tama to the

receiver, he has suffered losses of ownership and voting rights

as a Tama shareholder. However, these injuries cannot be traced

to the FCC’s approval of the license assignments. Instead, the

alleged injuries were caused by Tama’s default on its loan

payments, Zwirn’s foreclosure action, and the New York court’s

appointment of a receiver. This court has no authority to review

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these actions. Therefore, even if this court were to overturn the

FCC’s action, this would not afford Cherry the relief that he

seeks. The appointment of a receiver to take control of Tama’s

assets came as a result of action taken by the New York state

court, not the FCC. Accordingly, Cherry’s appeal must be

dismissed for lack of standing.

I. BACKGROUND

In 2004, Zwirn, a hedge fund, and Tama, the corporate

owner of multiple radio stations in Florida and Georgia, entered

into a financing arrangement whereby Zwirn agreed to lend

Tama $21 million, and Tama pledged as collateral all of its

accounts and assets, including several FCC broadcast licenses.

After the deal had been struck, Zwirn, Tama, and Cherry

encountered problems and disagreements, which resulted in

litigation. See, e.g., D.B. Zwirn Special Opportunities Fund,

L.P. v. Tama Broadcasting, Inc. (“SDNY Opinion”), 550 F.

Supp. 2d 481 (S.D.N.Y. 2008) (describing some of the legal

actions involving Zwirn, Tama, and Cherry). In one of these

actions, Zwirn brought a breach of contract suit against Tama in

the Supreme Court for the County of New York, seeking judicial

foreclosure on the loan collateral. Zwirn alleged that Tama had

defaulted on its loan obligation and requested the appointment

of a temporary receiver to “preserve and protect the property

pending the outcome of the litigation.” SDNY Opinion, 550 F.

Supp. 2d at 492 (citation omitted).

The New York court granted Zwirn’s motion for the

appointment of a receiver to take control of Tama’s assets. See

Order Pursuant to CPLR § 6401 Appointing a Temporary

Receiver (“Receiver Order”), D.B. Zwirn Special Opportunities

Fund, L.P. v. Tama Broad. Inc., No. 600692/2008 (N.Y. Sup. Ct.

Sept. 5, 2008), reprinted in Joint Appendix (“J.A.”) 30-36.

Under the terms of the court’s order, the receiver took

immediate control over Tama’s bank accounts and contracts and

assumed all ownership authority over the pledged collateral. Id.

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at 2-4, J.A. 31-33. Pursuant to 47 U.S.C. § 310(d), which states

that “[n]o . . . station license, or any rights thereunder, shall be

transferred, assigned, or disposed of in any manner, voluntarily

or involuntarily, directly or indirectly, or by transfer of control

of any corporation holding such permit or license, to any person

except upon application to the Commission,” the receiver

promptly filed applications with the FCC’s Media Bureau

seeking approval of the involuntary assignments of Tama’s radio

licenses. See Form 316 Application for Involuntary Assignment

of Tama Radio Licenses of Jacksonville, FL, Inc., Oct. 2, 2008,

reprinted in J.A. 38-53; Form 316 Application for Involuntary

Assignment of Tama Radio Licenses of Savannah, GA, Inc.,

Oct. 2, 2008, reprinted in J.A. 54-68; Form 316 Application for

Involuntary Assignment of Tama Radio Licenses of Tampa, FL,

Inc., Oct. 2, 2008, reprinted in J.A. 69-84 (collectively “Form

316 Applications”). 

Cherry filed a timely objection to the receiver’s Form 316

Applications. He contended that Zwirn had violated section

310(d) by prematurely taking control of the Tama stations, and

that the Form 316 Applications were simply Zwirn’s attempt to

“cover up” these violations. Glenn Cherry Objection to 316

Filing of Tama Broadcasting, Inc., Oct. 17, 2008, at 2, reprinted

in J.A. 86. After reviewing the parties’ submissions, the Media

Bureau approved the Form 316 Applications. In rejecting

Cherry’s objections, the Media Bureau stated:

[It] is well-established that the Commission will

accommodate court decrees, such as the instant

appointment of the Receiver for the [Tama] Stations, unless

a public interest determination compels a different

result. . . . Cherry has not raised a substantial and material

question of fact warranting further inquiry . . . [or]

demonstrate[d] that grant of the Assignment Applications

would be inconsistent with the public interest.

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Letter to Percy Squire, Esq., 24 FCC Rcd. 2453, 2455 (Feb. 26,

2009) (footnote omitted).

Cherry then filed an application for review under 47 C.F.R.

§ 1.115, requesting the FCC to stay the approval of the license

transfers until the pending litigation involving Zwirn and Tama

had been fully settled. Application for Review (Mar. 24, 2009),

reprinted in J.A. 127-29. On June 1, 2010, the Commission

dismissed Cherry’s application for review, finding it both

procedurally defective and substantively without merit. Tama

Radio, 25 FCC Rcd. at 7588. The Commission’s order

explained that Cherry had failed to “specify with particularity

the grounds warranting Commission review,” as required by

section 1.115, and that, as a result, “the application for review is

subject to dismissal.” Id. at 7589. The Commission also held

that, on a substantive review of the entire record, “the [Media

Bureau’s] staff properly decided the matters raised below.” Id.

Cherry now appeals the Commission’s order.

II. ANALYSIS

In order to pursue a cause of action in federal court, a party

must have Article III standing. Lujan v. Defenders of Wildlife,

504 U.S. 555, 561 (1992). To establish standing under Article

III, a party like Cherry must demonstrate an injury in fact that is

fairly traceable to the challenged agency action, and he must

show that it is “likely, as opposed to merely speculative, that the

injury will be redressed by a favorable decision” from this court.

Nat’l Wrestling Coaches Ass’n v. Dep’t of Educ., 366 F.3d 930,

937 (D.C. Cir. 2004) (citation and internal quotation marks

omitted). Article III standing is a jurisdictional requirement that

cannot be waived by the parties. Doe by Fein v. Dist. of

Columbia, 93 F.3d 861, 871 (D.C. Cir. 1996) (per curiam).

Cherry, as the party pursuing this action, bears the burden of

establishing standing. Lujan, 504 U.S. at 561. He has failed to

do so here.

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In American Airways Charters, Inc. v. Regan, 746 F.2d 865,

873 n.14 (D.C. Cir. 1984), this court held that “[n]o shareholder

– not even a sole shareholder – has standing in the usual case to

bring suit in his individual capacity on a claim that belongs to

the corporation.” In Whelan v. Abell, 953 F.2d 663, 671-72

(D.C. Cir. 1992), however, we acknowledged that shareholder

issues of the sort raised in Regan may not always implicate

Article III standing. Rather, according to Whelan, disputes

regarding shareholder claims often involve “real party in

interest” inquiries under Rule 17(a) of the Federal Rules of Civil

Procedure, and turn on “considerations and conventions of

corporate law.” Id. at 672. We need not ponder the

applicability of Rule 17(a) here, because it is clear that Cherry

lacks Article III standing quite apart from the considerations

raised in Whelan. See Bhd. of Locomotive Eng’rs and Trainmen

v. STB, 457 F.3d 24, 27 (D.C. Cir. 2006) (passing over the

agency’s prudential standing argument where the petitioner

lacked Article III standing).

Even if we accept Cherry’s contention that he suffered an

injury-in-fact as a result of his losses of “ownership and voting

interests” in the Tama stations, Appellant’s Br. at 18, he has still

failed to satisfy the causation and redressability prongs of

Article III standing. Cherry alleges that the FCC’s actions

“caused a concrete economic injury,” because “[h]ad the FCC

not granted the Assignment Applications, the Receiver could not

have exercised control over the Radio Stations.” Id. at 18-19.

This argument is superficially appealing, but inaccurate. In fact,

Cherry’s losses of ownership and voting interests in the Tama

stations came as a result of Tama’s default on its loan

obligations, Zwirn’s foreclosure action, and the New York

court’s appointment of a receiver.

This court’s decision in Microwave Acquisition Corp. v.

FCC, 145 F.3d 1410 (D.C. Cir. 1998), is instructive. In that

case, the FCC approved an application from MCI

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Communications Corporation (“MCI”), filed pursuant to 47

U.S.C. § 310(d), transferring certain licenses to Southern Pacific

Telecommunications Company (“SP”), in connection with

MCI’s sale of a service provider to SP. Microwave Acquisition

Corporation (“MAC”) objected, arguing that it had previously

contracted to purchase the service provider from MCI and that

MCI’s subsequent sale and license transfer to SP was a breach

of this contract. Id. at 1411-12. The FCC denied MAC’s

application for review of the transfer approval, and MAC sought

relief before this court. We held that MAC did not have Article

III standing because its alleged loss – the contractual right to

acquire the service provider – was attributable “not to any action

of the Commission but to MCI’s alleged breach of its

contract . . . . The transfer proceeding could not have caused the

alleged breach which occurred before the transfer application

was ever filed and would have continued whatever the

Commission’s decision.” Id. at 1412.

In this case, Cherry’s alleged injuries are not attributable to

the Commission’s approval of the license assignments, but

rather to the judicial foreclosure action before the New York

court and that court’s appointment of a temporary receiver to

control Tama’s assets. Even without FCC approval, control of

the Tama stations would remain with the court-appointed

receiver. See Receiver Order, at 2, J.A. 60 (granting receiver

control of Tama’s assets, including its stations, bank accounts,

and contracts with third parties); see also Arecibo Radio Corp.,

101 FCC 2d 545, 548, 550 (Aug. 13, 1985) (acknowledging that

“breach of contract questions are matters for the courts to decide

under state and local law,” and that court-ordered license

transfers generally will be honored because “a station’s

operating authorization must usually accompany its physical

assets”) (brackets and citation omitted). Where the alleged

injuries – here, the losses of ownership and voting interests in

the Tama stations – “occurred before, existed at the time of, and

continued unchanged after the challenged Commission action,”

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they “cannot be fairly traced to the transfer approval.”

Microwave, 145 F.3d at 1412 (citation omitted).

In addition, even if causation were properly established, the

relief that this court might give Cherry would not remedy the

injuries alleged, because this court has no authority over Zwirn’s

foreclosure action or the New York court’s appointment of a

receiver. As we noted in Microwave, “[r]edressability examines

whether the relief sought, assuming that the court chooses to

grant it, will likely alleviate the particularized injury alleged by

the [appellant].” 145 F.3d at 1413 (citation omitted). Cherry

posits that reversal of the FCC’s approval would restore his

property interest in the nine Tama broadcast stations.

Appellant’s Br. at 19. But, as noted above, even if the FCC

declined to approve the assignment applications, the receiver

would retain control over Tama’s assets and operations pursuant

to the order of the New York court. Where “we have no reason

to believe that [the appellant] would even reap his desired

[relief], he flunks the redressability criterion.” Huddy v. FCC,

236 F.3d 720, 724 (D.C. Cir. 2001).

Finally, we note that, during oral argument before this

court, Cherry’s counsel did not dispute that Cherry failed to

specify with particularity the grounds warranting Commission

review. Nor did counsel dispute that such a failure would

require the dismissal of Cherry’s appeal on the merits. See

BDPCS, Inc. v. FCC, 351 F.3d 1177, 1182-84 (D.C. Cir. 2003)

(explaining that a court must affirm an agency decision properly

dismissing a suit on procedural grounds regardless of the

agency’s consideration of the substantive merits). We need not

address this apparent procedural infirmity, however, because we

have found that Cherry lacks Article III standing. Steel Co. v.

Citizens for a Better Env’t, 523 U.S. 83, 88-89 (1998) (noting

that standing is “a threshold question that must be resolved”

before a court may proceed to the merits).

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III. CONCLUSION

The case is hereby dismissed because the appellant lacks

Article III standing.

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