## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it

N o. 11

- 2112 I N RE : F ORT W AYNE T EL S AT, I NC ., D ebto r-A pp ellee

. A PP E A L OF : J AS P ARTN ERS, L TD
.

A pp eal from the United S t ates Di strictC our t fo r the N o rthernDi stricto f Indian a, Fo rtWayne D ivisi on. No . 1:10- cv-00303- TLS

—Th eres a L . Sp ri ngman n, Judge
.
A RG UE D O CT OB ER 17, 2011

— D ECI DE D N OVE MBE R 23, 2011

Befo re B AUER, P OSNER, a nd W OO D , C ircu it Judges . P OSNER, Cir cu i tJudg e . T h is appeal r equi re s us to explo re the d u ty o f a tr ustee i n bankr up tcy to pros ecute uncert ai n cl ai m s f orthe re c ov ery fro m thi rd part i es of ass ets al l ege dly o w ned by the bank rupt e sta te. I nd iana Unive rs i ty had w hat i s ca l l ed an “Instr ucti onal Tel evi si on F i xed Serv ice” l i cense, wh i ch had been i ssued by th e Feder alCom m unica ti ons Com m i ssi on a nd autho

ri zed the unive rs i ty to bro adcast on speci fi ed f re quencie s.2 N o. 11

- 2112 L icens e s o f I T FS fr eq ue nc ies are avail able only to not-forp ro fit e n tit ies , su c h as th e u n ive rs ity , an d m ain ly enabl e the l i cens ee to bro adcast educati onalm ate ri al s t o h igh sc h oo ls a n d br an c h ca m p u s es w ith in a 35 -m ile r adi us o fthe l i ce ns ee ’ s tr an sm itter

. S ee 4 7 C. F

. R. § 74. 903( a) ( 5) (20 03)

. (The ITFSp ro gr am h as been r epl aced b y EB S

— the “Ed ucati onal Broadband Se rv i ce, ” § § 2 7. 1200 et seq
. —bu t it ap p ears t o b e s im il ar. See §§ 27.1214 (a)( 1), ( d). ) B u t a li censee wh o doesn’ t use al l the f re quencie s that i t’ s a uthor i zed to use can l eas e the unused ones to a f or - profi t e nti ty. E nt er the parties. T he de btor (that i s, th e ban krup t), Fort W ayne T el sat, was a t el evi si on br oadcast eri n I nd i ana. Its p rin c ip al u n se c u re d cr ed i t o r w as (an d is) th e a p p ell an t, J AS P ar tn er s, Lt d. , whi chw as owed 8 5 per ce nto fthe total am ou nt ow ed to th e u ns ecu red cred itors. J A S’s gener alpartner, J am es A . Sim on, i s the debto r’ s f ounder and presi dent. I t i s uncl earj ust what JA S Partners does besi des “funneli ng fund s fro m o therco rpor ate enti ti es to M r . a nd M r s. S i m o n f o r the i r pe r so na l us e underthe gui se of l oans to avo i d ta x co nsequences. ” U nited St at e s v. Si m on , N o . 3 : 1 0

- C R

- 0 0 0 5 6 ( 0 1 ) R M, 2 0 1 1 WL 9242 64, at* 2- 3 ( N

. D. I nd

. M ar . 14 , 20 11)

. Both th e debt or and JAS ar e f or - profi t e nter pri ses . The unive rs i ty had agr eed to tr ansferi ts l i cense to an o th ernot- f o r - pr o fi t br o adc as te r, the F o r t W ay ne Pu bli c B road cast ing Servic e ( w hich the p arties callPB S). The F CC was c o nt empl at i ng“ us e i t o r l o se i t” r egul at i o ns th at w ou ld d ive st ITF S lice n se es of th eir lice n se s if th eyb r o adc as t l es s th ana s pec i fi ed m i ni m um a m ou ntN o. 11

- 2112 3 of edu cation al program m in g , and the u niversity d idn ’t thi nk i t co uld s ati sfy the new requi re m ent a nd pre f erre d to ass i gn i ts lice n se to PBS f ornothi ng tha n l ose i t t o the F C C. I n anti ci pati on o fthe ass i gnm ent, PBS had ag r ee d t o l ea se t o the de bt o r a s ubs ta nt i alpo r ti o n o fthe b r o a dc a sti ng r i g ht s c o nfe r r e d b y the l i c e ns e . ( La t e r P BS “q u itc laim ed its ri g h t s u n d er th e lic en se to th e d eb to r.) Su c h a l eas e would be an a sse t o fthe debtor, and w ou ld th u s in c re as e t h e a m o u n t o f m on ey th at JA S c ou ld expect t o re cei ve a s the debt or ’ s princi pal unsecur ed cred itor. The unive rs i ty denie d that i t had t ra nsfer re d i ts l i ce ns e to PBS

. Butb el i ev i ngtha t th e tr an sferha d g o ne thro ugh orwould go thr ough, the debtorm od ifi ed br o adc as tinge qui pm en t ata cost o f$ 35 0, 00 0. The tr ustee in b an kr up tcy fi l ed a c l ai m ag ai nst the uni ver si ty conte nd i ng tha t it h ad p ro m i sed PBS the l i cense, that th e d eb to r h ad rea so n a b l y r e lied on th e p ro m ise in m ak i ngthe e qui p m en t m o di fi ca ti o ns , a nd tha t th e doctr i ne o fpro m i sso ryes toppel enti tl ed th e d ebto r to dam age s o f$1 16, 000

— th e t rust ee’ s e sti m ate o fthe unrec o v e r ab l e c o s t s i nc ur r e d b y th e de b t o r t o ma k e the e qu i pm ent m odi fi cati ons re l ati ng to the anti ci pated l i cense. The debtorwas n ot a p rom i see , thati s, was not a par ty to the y et- to-be per f or m ed contr act between the unive rs i ty an d PBS to transferthe l i ce ns e. ButPBS ’ s co nt i ng en t l e a s e t o the de b t o r ha d mad e the deb t o r a n i nt e nd e d thi r dpartybene fi ci ar y o fthatco ntra ct, a re l ati onship that can su p p or t a cla im of p ro m iss or y e st op p el. Fi rs tNat ’ l Bank of Logans portv. Logan M f g. Co. , 5 7 7N. E. 2 d 9 4 9 , 9 5 4 ( I nd

.4 N o. 11

- 2112 19 91 ); A rthur Anders en LLP v. Ca rl is le, 12 9 S

. Ct. 18 96, 19 02 ( 2 0 09 ); Vid i m os , Inc . v. La s e rLa b Lt d. , 9 9 F

. 3 d 2 1 7, 2 2 2 ( 7th C ir. 1996) (Ind iana law ); Rest atem ent( Second) of Co ntracts § 90, com m en t c (1981). A ny w ay, th ou g h prom issory e s t o p p e l i s ma i n l y a d o c t r i n e o fc o n t r a c tl a w th a ta l l o ws r e a s o nab l e r e l i a nc e t o b e s ub s t i t ut e d fo r the n o r m al r equi r ementtha t to b e en f o r ce ab l e a pr o m i se b e i n e xchange f orco nsi derat i on ( though the consi derat i on coul d consi st j ust o fa re ci proca l pro m i se) , i t i s s om eti m es ap p lied to p ro m ise s t h at w ou ld n ot be en for c ea b le un de r c o nt r a c t
- l a w p ri nc i pl e s e v e n i fthe y we r e s up p or te d by co n sid er at ion

. G a rw o o d P a ck agin g, I n c. v. A llen & Co. , 378 F.3d 698 , 702-04 (7th C ir. 2004) (Ind iana law ). W hetherthe tr ustee ’ s pro m i ss or y e sto pp elcl ai m was st r o ngo r wea k, the uni ve r si tys et tl ed i t for $10 0, 00 0. But the t rust ee did n ot o b tai n as part ofthe set tl em ent ( or even see k ) th e assignm en t of th e li cen se to the de btor. H e had co ncl ud ed that al though PB S had quitcl ai m ed i ts i nteres t in the l i cense to the debt or( oras m uch of th e i nt er est as th e l aw pe r m i tt ed i t to qui tc l ai m ) , the q u itc laim h ad c o n v ey ed n ot h in g b ec au se th e u n iversity’s l icens e had nev er actu all y been assigned to PB S. Bec ause, i fthe bankr uptcy co urt approve d the s ett l em ent, the debtor ’ s e sta te w oul d have i nsuffi ci ent a sse ts to pay the unsecur ed cr edi tor s, J A S ask ed the c ou rtto rej ec t it . See Fe d . R . B an kr . P. 20 02 (a)( 3), 90 19 (a); Prot e ct i ve C o m m ittee fo r Ind epen den t Sto ck ho lders o f T M TTrai ler Ferry, Inc . v. Ande rs on , 3 90 U. S

. 4 14 , 4 24

- 25 , 4 34 ( 19 68) ; N ational Sure ty C o. v . C o riel l , 28 9 U.S

. 42 6, 43 6- 37 ( 1933 ) (B ra n d e i s , J. ); In re D octors Hospit al of Hyde Pa rk, Inc. , 474N o. 11

- 2112 5 F.3d 421, 425-26 ( 7th C ir . 2007). I t a rg ued that the tr ustee ha d f a i l e d t o u s e d u e c a r e t o ma x i mi z e th e a s s e t s o ft he debtor ’ s e sta te; he ha d not a d eq uatel y invest i gat ed th e p o ss ib i l i t y o fo b t a i n i n gth e l i c e n s e , wh i c h J AS es ti m at es t o b e wor th$ 4. 1 m i l l i on, as thatwas the am ount the uni ver si ty had been o ff er ed ear l i erf ori t. That’ s m uch t o o hi g h a n e st i m at e o fthe v al ue thatthe lice n se w oul d have t o the debt or . To a cquir e anyr i g hts unde r the l i c e ns e , the de b t o r fi r s t wo ul d ha v e ha d t o fin d a nonpro fi t e nti ty to be the l i censee , would have ha d t o s ec ur e th e F CC’ s appr o va l o fthe a ss i g nm en t o fthe l i ce ns e to PBS ( a pr o tr ac te d pr o ce ss i fthe u n ive rs ity res ist ed ), an d w ou ld h av e b ee n en tit led on ly to us e so much o fthe l i ce ns ed f r eque nc y b an d a s th e l i censee di d not use . And $4

. 1 m i l l i on was a pri ce that had been o ff er ed f orthe l i cense as a par t of a packa ge of li ce ns es , a nd b undl es o fs uchl i ce ns es a r e m o re va lu ab le t h an th e s u m of th e p ric es of th e lic en se s if sol d separa tel y. M or eov er, i t was a pri ce t h at had been off er ed t o the uni ver si ty m onths bef or e the se ttl em ent, and du ri ng the i nter valthe pri ces ofsuch l i censes had p lum m eted , hav ing sp iked earlier only bec au s e o f a contem pl at ed m er g era m o ngI TF S l i ce ns ee s ea chs ee k i ng to e nl ar g e i ts b r o adc as ting r i g ht s as a way o fg aini ng l eve ra ge i n m er gernego ti ati ons. I n the f ace of these co nsi derat i ons, the tr ustee est i m ate d the va l ue o fthe l i cense to the debt orto be on ly $ 60 0,0 00 , an d th at w as a re as on ab le e s t i m at e. It is not a neg l i gibl e a m ount o fm oney a n d so he co nsid ered pr es singthe the o r y tha t PBS was the r eal o wnero fthe6 N o. 11

- 2112 l i cense and so coul d ass ign r i ghts encom passed by i t. Bu t a fteri nvest i gat i ng, and re cei vi ng a cer ti fica te f ro m the FCC st ati ng tha t the l i cense w as own ed by th e u n i v e r s i t y , h e d e c i d e d t o ab a n d o n t h e th e o r y . J AS o ppo se d aba ndo nm en t butthe b an k r upt cyj udg e co ndu cted a hear i ng and co ncl ud ed that the t rust ee had ac te d p ru d en tly in s et tlin g t h e d eb to r’s en tir e c laim ag a i ns tthe u ni v e r s i t y f o r $ 1 0 0 , 0 0 0

. T he di s t r i c tj ud ge ag re ed , pr ec ip ita tin g JA S’s ap p ea l to u s. JA S con ten d s th at if only th e tru stee had sp en t a m ere $20, 000 on pre tr i aldi sco ver y, he woul d have l ear ned that, d esp ite the cert if ic ate from the FC C , PB S did h av e a va lid c laim to th e lic en se aft er al l a n d th at th e lic en se rea lly was worth $ 4. 1 m i l l i on t o J A S ( thi s we know i s no t tr ue) , and he co uld have sued the unive rs i ty f orthat am ount ( oras ked f orspeci fi c per f or m ance

— an o rder that th e uni ve r si tyt r an sferthe l i ce ns e to PBS f o r the benefit o f J A S) and had he done s o w oul d have o btai ned a f avo rabl e j ud gm ent. Ra th ertha n t ak i ngthe c i r cui to us r o ut e o fc ha l l en g i ng th e se tt lem en t, J AS c o ul d a t th e o ut se t ha ve a sk ed th e tr ustee to as si gn the debtor ’ s ri ghts aga i nst the uni ver si ty to J A S and the o therunsecur ed cr edi tor s r atherthan litig at in g t h em h im se lf. A n FC C lice n se is an as sig n ab le as se t o f a d eb to r’s es ta te , M idtown C hirop ra ct ic v. Il li nois Far m e rs Ins . Co. , 8 47 N .E .2d 9 42 , 9 44 -45 (Ind . 200 6); In reTak C om m unicati ons, Inc. , 985 F .2 d 9 16, 918 ( 7th Cir. 1993), provi de d the F CC c o ns e nt s t o the a s s i g nme nt
. 4 7U. S

. C. § 310(d ); In reCe nt r al Arkans as Br oad ca s t i ng Co. , 68 F.3 d 21 3, 21 4-1 5 (8 th C ir. 19 93 ) ( p e r c u ria m ). B u t t h isN o. 11

- 2112 7

ro ute was bl ock ed by th e settl em ent, wh i ch by oper ati on o f the do c t r i ne o f r e s j ud i c a t a wo ul d ha v e pre c lu d ed an y c laim b y J A S or th e o th er u n se c u re d cr ed itor s a gai nst the uni ver si ty that aros e o ut o fthe dispute ove r the license , si nce a n ass i gnee ofa cl ai m ( w hi ch woul d ha ve b ee n J AS) i s i n pr i vi tywi ththe a ss i g no r ( th e d eb to r, rep re se n te d by th e t ru st ee ). Taylor v. Sturgell, 55 3 U .S. 88 0, 89 4 a n d n . 8 (20 0 8); Per ry v . Gl ob eAut o Re cy cl i ng, Inc. , 22 7 F

. 3d 950, 95 3 ( 7th Ci r. 20 00 ); R e s t at e m e nt( Se co nd) of Judgm ents § 55 (1) (1 98 2). S o JA S h ad to p ro c ee d as it d id

— h a d t o t r y t o g e t th e s e t t l e me n t s e t a s i d e o n t he g r o un d tha t the b a nk r up t c y j ud g e ha d e r r ed i n ap proving i t because the tr ustee had f al l en dow n on the j ob. There i s no nov elt y i n re quir i ng tha t a j ud ge det er m i ne the r ea so nabl en es s o fa se tt l ement; f o r e xam p le i t is re q u ir e d i n class ac tions (Fed

. R. Civ. P. 23(e)) because o fthe potenti alco nfl i ct o fi nter estbetw een th e c las s m em b er s a n d cla ss co u n se l. Se e, e.g, Thorog ood v. Se ars , Roe b uc k & C o. , 547 F.3d 742 , 744-45 (7t h C ir. 20 08 )

. De te r m i ni ngthe r ea so nabl en es s o fa s ettl ement r equi r es c o m par i ngthe a m ou nto fthe s et tl ementt o the ne t ex pec te d g ain o fs ee k i nga l i ti g at ed j ud g m en t. The “expecte d gai n” i s the ga i n i fthe j u d gm ent i s f avo rabl e, d iscoun ted ( th at is, m ultiplied) by th e p r o bab il ity ofa f av o r ab l e j udg m en t. The qua l i fi ca ti o n “ ne t” s i g na l s th e ne ed to s ubt r ac t th e co sto fpr es singa he ad to j udg m en t i n o r de r t o e s t i mat e the v a l ue o f l i t i g a t i ng t o j ud gm ent r atherthan ofse ttl i ng. S up pose the s ett l em ent i s $1 mil l i o n, a nd a l i ti g at ed j udg m en t f avo r ab l e to the pla i nti ffwould be $4 m i l l i on but the probabi l i ty ofo b-8 N o. 11

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ta i ni ngthe j udg m en t woul d ha ve b ee n o nl y 1 0 per ce nt and the co st ofo btai ni ng i t (th e l i ti gat i on co st) $1 00, 000. The n the ne t ex pec te d g ain fr o m l i ti g at i ngt o j udg m en t w oul d have be en o nl y $ 300, 000 ( $4 m i l l i on x . 10 = $ 400, 000; $400 , 000 – $ 100, 000 = $ 300, 000)

— m uchl o wer tha n the $1 m i l l i on s ett l em ent. A nd so the set tl em ent woul d be re aso nabl e. W e are sim p lifyin g; w e ha ve n ’t con sid er e d in te rm ed iate poss ibi l i ti es between a j ud gm ent o f$4 m i l l i on ( or m o r e) a nd a j udg m en t o f$ 0, o r the po ss ibi l i tyo fthe pl aint i ff’ s o bt aini ng an ev en be tt er se tt l ement by co nti nuing to l itig ate f ora ti m e, o r the pl ai nti ff’ s r i sk av er si o n o r risk pr efer en ce , o r the di ffi cul tyo fa tt ac hi ng ex ac t pr o babi l i ti es t o i nhe r en tly unc er tain ev en ts , o r the co sto fne g o ti at i nga s et tl ementin li eu o fl i ti g at i o n. But though s i m pli sti c, o ur e xam ple sho uld s uffi ce t o i nd i cate th e b a s i c a na l y s i s r e qu i r e d t o de t e r mi ne whe the r an am ount a ccepted i n set tl em ent o fa cl ai m i s r eas onabl e. E ss en tia lly th e t ru st ee d ec id ed th at p u rs u in g a cla im f orthe l i cense ( that i s, f ora deter m i nati on that PB S w as the ow ner ofthe l i cense, notthe unive rs i ty, and that the debtor w as enti tl ed to a bi g chunk of i t by vi rtue o fi ts qui t c l a i m de e d fr o m PB S ) wa s h o pe l e s s : the n e te xp e cted g ain w as c l o se t o z er o , g i ve n the c er ti fi ca te i ss ue d b y the FC C , w hich confirm ed the u niversity ’s contin ue d ow ne rshi p. I fthatwas a r eas onabl e deci si on f orthe tr ustee to m ake , hi s r efusalto i n ve st i n a furtheri nvest i gat i on w as als o re as on ab le

— especi al l y s i nce he w ould h ave had to r ej e c t the s e t t l e men t a nd thu s k i s s the $ 1 0 0 , 0 0 0 that i t ha d a dded to the de bt o r ’ s es ta te g o o dby e. And theN o. 11

- 2112 9

se t t l e me n t h a d b e e n a s t e a l : th e t r u s t e e h a d e s t i ma t ed th e prom i ssory e sto pp elcl ai m to be w or th o nl y $ 35, 000 ( J A S has no t ques tio n ed that est i m ate ) and had got ten al m ostthr ee ti m es that am ount. The m ult ip le m ay have r efl ec te d the c o stthe uni ve r si tywoul d ha ve had to i nc ur to defe nd ag ai nst the c laim , but the f act re m ai ns that $1 00 ,00 0 g av e t h e d eb to r’s es ta te a w in d fall. I t’ s no t a s i fthe questi on o fthe debtor ’ s r i ghts, i fany, u n d e r th e u n i v e r s i t y ’ s l i c e n s e we r e s t r a i g h t f o r wa r d

. The un i v e r s i t y h a d w a nted t o a s s i g n th e l i c e ns e t o P BS

— that m uch i s cl ear . I n d ee d it h ad agr eed to do s o. That was the b asi s o fthe debtor ’ s pro m i sso ryes toppel cl aim

— th at in m ak in g t h e e q u ip m en t m od ifica tio n s t h at it w ou ld need i n or der t o be abl e t o bro adcast on the fre quencie s th at PBS w oul d no t be usi ng the debtor had a cted in re aso nabl e r el i ance o n the unive rs ity ’s pro m i se to ass i gn the l i cense to PBS. The uni ver si ty had even s ubm i tte d an ap p li cation to th e FC C to assign th e li cen se to PB S. Tha t was b ac ki n 1 99 4 butthe F CC ha d da wdl ed i n a ct i ng on th e a p p lica tio n . (I t h as n ev er ac te d on it, as w e’ll se e.) Laterthe unive rs i ty had author i zed PBS to fi l e with th e FC C an ap p li cation f or a l icens e to m od ify PB S’s broad cast ing facil iti es to ena ble th e ir us e by th e d ebtor, pu rs uant to PBS’s condi ti onall eas e o fexce ss capaci ty to the debt or . P B S had i ntended to use the o ccasi on ofap ply i ng to the FCC f orthe m odi fi cati on l i cense to re new the appli cati on f oras si gnm en t o fthe bro adcast li cen se on th e basis of PB S’s agreem en t w ith th e un iversity. Bu t it fai led to ch eck a box on th e ap p li cation fo rm th atwoul d ha ve i ndi ca te d tha t i t w as ap p l y i ngf o r the10 N o. 11

- 2112 broad cast l icens e and not j us t f o r p erm issi on to m od ify eq u ip m ent. The FCC i nter prete d the o m i ssi on t o m ean that the a pp l i cati on ori gi nal l y subm i tte d by the uni ver si ty to ass i gn the l i cense to PBS w as bei ng ab andoned, and so it stop p ed p rocess ing th e ap p li cation

. (I t gran t e d PB S’s appli cati on f orm odi fi cati on

— th e basis for th e d ebtor’s prom i sso ryes toppel cl ai m bec ause the m odi fi cati on w as m ade and pai d fo r by the debt or ratherthan by PBS. ) A s a r esul t, the ass i gnm ent o fthe l i cense w as neverapprov ed by th e FC C and so PBS neve r had to honori ts l eas e t o the debtoro fthe excess capaci ty that th e li cen se w ou ld h ave given PB S. The parti es’ i nsouci ance re gar ding the a ssi gnm ent o f th e lic en se m ay be at tr ibu t a b le t o its h av in g h ad little va l ue whenthe uni ve r si tya nd PBSmade th ei r d eal, a nd in d e e d u n til re c en tly . In 19 94 th e In st ru c tio n al T ele visi on F ixed Ser vi ce fre quency band w as l i ttl e use d by i ts l icens ee s, b ec au se the y wer e edu ca ti o na l i ns ti tu ti o ns th atl ac k ed th e r es o ur ce s to e xpl o i t br o adc as tingo ppo rtuni ti es eff ecti vel y. But sinc e 2 003 a co m pany nam ed Clea rwir e has used IT FS ( now EBS) excess - capaci ty leases to create a n ational w ireless broad ban d netw ork ( used by Spri nt’ s sm ar tphones) to pro vi de cel l ula r and I nter net s er vi ce. ( Fo r back gr ound on Cle ar w i re , see ww w . cl ear w i re . com /c om pany/o ur- network, vi si ted No v . 6 , 2 0 1 1

. ) A s a r e s u l t, s u c h l e a s e s h a v e b e c o me m uch m or e v al uabl e than they were. A s a n al ter nati ve to i ts conte nti on that PBS had acqui re d the uni ver si ty’ s l eas e, J A S ar gues that the debt or acq uired , t hrou gh PB S’s qu itclai m de ed to i t, th e latter’sN o. 11

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contr actualr i ght t o com pel the unive rs i ty to tr ansfer th e l i cense

— th e d e e d s u b s t i t u t e d th e d e b t o r f o r P B S

. But the F CC m ust a pp ro ve the a ssi gnm ent of a br oadcast l i ce ns e, 4 7 U. S

. C. § 3 10 ( d) , a nd it cou l d no t appr o ve the ass i gnm ent o fan Instr ucti onalTel evi si on F i xed Serv ice l i cense to an enter pri se that, being f or - profi t, was not l ega l l y a uthor i zed to r ecei ve such a l i cense. A n unauthor i ze d as si g nm en t woul d no t be i n the “ publ i c i nt er es t, ” th e st atut o r y crite r i o n f o r the Co m m i ss i o n’ s appr o vi ng th e a ss ign m en t o f a b ro ad c as t lic en se . F CC v. W NCN Lis te ners G uild, 450 U .S. 58 2, 59 3-9 4 (1 98 1); M 2Z Netw o rks, In c . v . F CC, 558 F.3d 554 , 558 (D.C

. Cir. 2009). W e ca n i m ag in e an ar gum ent that despi te i ts f ai l i ng to check the a ssi gnm ent- appli cati on box, PBS was the equi tabl e o w ner ofthe bro adcasti ng r i ghts c onfer re d by the uni ver si ty’ s l i cense, and that the uni ver si ty w as unj us t l y e nr i c he d b y b e i ng a b l e t o l e a s e t o Cl e a r wi r e ( or a ny o ne e l s e ) the e xc e s s b r o a dc a s tc a pa c i t y tha t“ s ho ul d” ha v e b e e n PB S ’ s t o l e a s e t o the d ebt o r . T he F CC’ s r e c o r ds ofbr oadcastl i censes ar e a m ess and the Com m i ssi on coul d, w e as su m e, deem a l i cense to have been tr ansf er re d w i th i ts approvaldespi te the par ti es’ f ai l ure to f ol l ow requi re d fo rm al i ti es; we haven’ t be en poi nted to an y s ta tu to ry or re gu lat or y p ro vis ion th at w ou ld forb id su cha n e xe r ci se o fa dm i ni st r at i ve di sc r et i o n. Butthe C om m issi on m ight w ellbe un forgi ving of PB S’s f ail ure to check the r i ght b ox, and ofthe gener ally l acka dais i cal m anner i n w hi ch the unive rs ity and PBS had att em pted to tran sfe r t he l icens e. A de nial on the basis of th e pa rtie s’ la c k of d ilige n c e p r e s u m ab ly w ou ld be w ith in th e C om m iss ion ’s d isc re tio n . F l o r i d a C e l l u l a rMo b i l C o mmun i c at i on s Co rp. v . F CC, 28 F. 3d 191, 200 (D

. C

. Cir. 1994 );12 N o. 11

- 2112 Roy c eIn t ’ l Br oa dc as t i n g Co. v . F CC, 82 0 F

. 2d 13 32, 13 36- 37 (D

. C

. Cir. 1987). A nyw ay w e don’ t underst and th is to be J A S’ s theor y, and i t would be f ar - f etche d. The unive rs i ty tried to ass i gn i ts l i cense to PBS i n 199 4, but th e as signm ent had as we k no w t o b e a pp r o v e d b y the F CC, a nd i t was not approve d, and thi s was notthe unive rs i ty’ s f aul t. S o, stuck w ith the l i cense, the unive rs i ty w as enti tl ed to l eas e the excess bro adcasti ng ca paci ty that the l i cense h ad giv en it

— yet the unive rs i ty, not the FCC , w ould be the de f e nd a ntu nd e r the the o r y that w e’ v e j us to ut l i ne d, j ust a s i t i s under the theor y that J A S i s pre ssi ng. T h a tth e o r y ( i n s o f a r a s we u nde r st a n d i t, wh i c h we m ayno t, b ec au se i t i sn ’ t cl ea r l y a r ti cul at ed) i s th atthe F CC did ap p ro ve th e a ss ig n m e n t, t h ou gh it h as sa id it di dn’ t, a nd tha t i fthe trust ee ha d r um m ag ed i n the FCC ’ s fi l es i t would have f ound t he approv al

. The sugges ti on i s unapp ea l i ng. I fdi sgr untl ed br oadcast er s ca n pee r b e h i n d c e r t i fi c a t e s i s s u e d b y th e F C C a t t e s t i n gt he exi ste nce o fa l i cense, an i m port ant cl ass ofpro perty ri ghts w i l l be unsettl ed. J A S has nev erind i cate d w hat th e l eg alb as i s f o r c ha l l en g i ngs uchc er ti fi ca te s m i g ht b e an d we cannot thi nk o fany that w oul d be a pp l i cab le to thi s s uit

. J A S has, i t i s t rue, m anage d to fi nd docum ents i n w hi ch th e FCC cal l s PBS the l i censee . M aybe the tr ustee wou ld have f ound m or e thro ugh d iscover y. But the cer ti fi cate i ssued by the Com m i ssi on, w hi ch states that the univ er si ty i s the l i cense hol der l i ste d i n the FCC ’ s publ i c l i cense re gi str y, i s, a s f aras we are i nfo rm ed, defi ni ti ve evi dence ofthe own er shi p ofthe l i cense, ev en i fthe Com m i ssi onN o. 11

- 2112 13

m ay ear l i erhave bee n co n fu sed abo ut wh o the l i cense h old er w as . Cr awf

or d v. F CC, 417 F.3d 1289 , 1 297 (D.C

. Cir. 20 05 ); Orego n v . F CC , 1 02 F.3d 58 3, 586 (D

. C

. Cir. 1996). A nd to r epeat a pre vi ous point, were P B S th e li censee , s t i l l the F CC c o ul d n o ta pp r o v e the t r a ns f e r o fi t s l i cense to a n e nt i tyf o rbi ddenb y law t o ho l d the l i ce ns e: the debtor, a f or - profi t e nter pri se. A nd r em em bert h at the l i cense w asn’ t a ctual l y worth $4

. 1 m i l l i on

— th atthe t r us te e es ti m at ed i ts v al ue t o the debtorto be only $600, 000 and that thi s was a re asonab l e e sti m ate
. H e thought the pro babi l i ty t h at a cl ai m to tho se ri ghts w oul d succeed was zero , but eve n i fi t were m uch higher i t s ti l l w ou ld n’thave bee n w or th p u rs uing

. Li ti gat i on i s e xpensiv e! I fthe probabili ty of th e tru stee’s p revaili ng on such a c la im w ere 50 per ce nt( m ucht o o hi g h, i n l i g hto fo ur a na l y si s), th e e x p ec te d ga in from p re ss in g t h e c laim w ou ld be $300 , 000, but that w oul d b e gr oss ra therth an n et. The $1 00, 000 re cei ved i n set tl em ent woul d be g one, lea vin g a n ex p ec te d g a i n from litiga tin g of $ 20 0,0 00 . I t is u n like ly t h at a c om p lex co m m er c ial litig at ion co u ld be c o nduc te d f o r l es s th antha t am ou nto fmone y a nd th er efo r e th e ne t g ain ( th e g r o ss e xpe ct ed g ain mi nus l i ti gat i on e xpense) would be unlik el y t o exceed $ 100, 000 and m i ght wel l be negat i ve. T h e b an k r u p t c y jud ge an d th e d ist ric t jud ge got it r i g ht : the t r us te e ha d a ct ed r ea so nabl y i n s et tl i ngthe debtor ’ s cl ai m ag ai nst the uni ver si ty f or$1 00, 000. A FFI RMED
.

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