Opinion ID: 218601
Heading Depth: 1
Heading Rank: 6

Heading: Potentially liable entities

Text: Petitioners contend that the Commission acted unlawfully by providing that it may hold satellite cable programming vendors liable for acts of terrestrial programming withholding under section 628(b). According to petitioners, when an entity engages in conduct with respect to terrestrial programming, it is not, as section 628(i)(2) requires, engaged in the . . . distribution . . . of satellite cable programming, 47 U.S.C. § 548(i)(2), and so may not be held liable as a satellite cable programming vendor under section 628(b). We are unpersuaded. As we held in a case involving strikingly similar statutory language, [t]here is nothing linguistically odd about defining a set of firms subject to regulation in terms of the conduct of particular activities, and yet also regulating some other activities that are not part of the definition. WorldCom, Inc. v. FCC, 246 F.3d 690, 693-95 (D.C.Cir.2001) (holding that the Commission had authority to regulate local exchange carriers when they provided DSL services even though the statute in question defined local exchange carriers to mean any person that is engaged in the provision of telephone exchange service or exchange access). In defining satellite cable vendors, Congress could have required that an entity would be covered only `when' or `to the extent' that it provides the regulation-triggering services. Id; see also 47 U.S.C. § 153(51) (A telecommunications carrier shall be treated as a common carrier under this Act only to the extent that it is engaged in providing telecommunications services. . . . (emphasis added)). But as the Commission recognized in its order, Congress imposed no such limitation. See 2010 Order, 25 FCC Rcd. at 779 n. 192 ¶ 49. Petitioners argue that the Commission's interpretation of section 628(i)(2) leads to irrationally different treatment of similarly situated entities because it subjects programmers selling both satellite and terrestrial programming to liability while exempting programmers selling only terrestrial programming. Although we agree that section 628(b)'s omission of terrestrial programmers creates an odd gap, we reject petitioners' suggestion that the Commission must address this disparity by expanding the gap to also exempt dual programmers even though they (1) are covered by the literal terms of the statute as satellite programming vendors, and (2) can engage in conduct the statute expressly prohibits. Aware of this problem, the Commission has chosen to go in the opposite direction, relying on vicarious liability to regulate indirectly the conduct of terrestrial-only programmers. We turn, then, to the permissibility of that move. In its order, the Commission established that when a terrestrial programmer is wholly owned by, controlled by, or under common control with a cable operator or covered satellite programming vendor, the latter entity can appropriately be held responsible for the discriminatory acts of its program supplier affiliate because it controls the supplier and the supplier's unfair actions are designed to benefit [the entity]. 2010 Order, 25 FCC Rcd. at 786 ¶ 57; see also 47 C.F.R. § 76.1001(b)(1)(ii) (codifying this rule). Petitioners first argue that imposing liability on cable operators based on control or common control runs afoul of section 628 because such operators are liable under subsection (c)(2)(A) only when they unduly or improperly influenc[e] an affiliated programmer's decision. But for reasons explained at length in Part II, see supra pp. 705-07, subsection (c)(2)'s minimum requirements impose no affirmative limits on the Commission's ability to pursue its statutory objectives under subsection (b). Petitioners next contend that the Commission engaged in arbitrary and capricious reasoning when it assumed that a terrestrial programmer who withholds programming from an MVPD always does so for the benefit of a commonly controlled cable operator even when that operator is no more than a sister subsidiary corporation. According to petitioners, that assumption fails to account for the possibility that a terrestrial programmer might enter an exclusive agreement with an unaffiliated MVPD. Such a deal, petitioners claim, would benefit only the unaffiliated MVPD (who gets the exclusive programming) and the terrestrial programmer itself (who secures an exclusivity premium). But the Commission has determined, reasonably in our view, that discriminatory practices by terrestrial programmers will often be intended in part to benefit a cable operator under common ownership. See 2010 Order, 25 FCC Rcd. at 786 ¶ 57. After all, the entire theory underlying section 628 and the Commission's implementing rules is that vertically integrated cable programmers have incentives to enter arrangements favoring affiliated cable operators. See supra pp. 700-01. Even where programmers enter exclusivity arrangements with unaffiliated MVPDs, which petitioners do not suggest is nearly as common as deals between cable-affiliated entities, the programmer might enter the deal at least in part to benefit the affiliated cable operator by closing some rivals out of the market. For example, if a cable operator has one DBS competitor and one wireline competitor but considers the latter a greater threat to its dominant position, exclusive arrangements between an affiliated terrestrial programmer and the DBS company that keep must-have programming from the wireline company will redound to the cable operator's benefit. Advancing a third argument, petitioners contend that section 628(b)'s plain language precludes vicarious liability because that provision only prohibits a cable operator from engag[ing] in, 47 U.S.C. § 548(b), certain conduct, which, according to petitioners, presupposes direct liability. But because petitioners first raised this argument in their reply brief, we treat it as forfeited. See Gen. Elec. Co. v. Jackson, 610 F.3d 110, 123 (D.C.Cir.2010).