Opinion ID: 75626
Heading Depth: 3
Heading Rank: 1

Heading: Burden of Proof & Statutory Presumption to Determine Unserved Household

Text: 38 First, EchoStar argues that the Networks failed to satisfy its burden of demonstrating that there is a substantial likelihood that it can establish EchoStar's violations of SHVA and the Improvement Act. The Networks counter that under 17 U.S.C. § 119(a)(5)(D) EchoStar has the burden of demonstrating that its distant network subscribers are unserved. 39 Resolving this, the district court reasoned that [a]lthough the network parties bear the burden of proof on their motion for preliminary injunction, `the court must consider that the ultimate burden of proof at trial is upon the nonmovant.' Thus, the court concluded that the Networks could `establish likelihood of success on the merits by demonstrating that [EchoStar] is unlikely to prove at trial that its subscribers are `unserved households.' 40 In the 1994, Congress added § 119(a)(5)(D) to SHVA, providing that: 41 In any action brought under this paragraph, the satellite carrier shall have the burden of proving that its secondary transmission of a primary transmission by a network station is for private home viewing to an unserved household. 42 17 U.S.C. § 119(a)(5)(D) (1996). This provision places the ultimate burden of demonstrating SHVA eligibility on the satellite carrier. While the satellite carrier is harnessed with the ultimate burden at trial, it is well-settled that in a preliminary injunction posture the movant must always bear the burden of demonstrating the four prerequisites. See e.g., Siegel, 234 F.3d at 1176. In resolving how to allocate these burdens, the mechanics of the Improvement Act are illustrative. 43 The Improvement Act allows parties to establish presumptively whether a person resides in an unserved household . . . , through the ILLR predictive model, as it may be amended by the FCC. 17 U.S.C. § 119(a)(2)(B)(ii)(I) (West Supp. 2001). In establishing the presumption, the provision specifically directs that courts shall rely on the I[LLR] . . . model as the FCC may revise it. See id. As a corollary to this, the Improvement Act amends SHVA's reporting requirements by requiring that: satellite carrier[s] that make[ ] secondary transmissions of a primary transmission . . . by a network station pursuant to subparagraph (A) shall, 90 days after commencing such secondary transmissions, submit to the network that owns or is affiliated with the network station a list identifying (by name and street address, including county and zip code) all subscribers to which the satellite carrier makes secondary transmission of that primary transmission. 44 17 U.S.C. § 119(a)(2)(C) (West Supp. 2001). 8 45 Utilizing the Improvement Act's paradigm in a preliminary injunction posture, the district court should on remand require the Networks to adduce sufficient evidence to apply the § 119(a)(2)(B)(ii)(I) presumption based on the records submitted to it by EchoStar under § 119(a)(2)(C)'s reporting requirements. While SHVA and the Improvement Act place the ultimate burden of proof at trial on the satellite carrier, see 17 U.S.C. § 119(a)(5)(D), the fixed principle in the preliminary injunction context is that the proponent of a such an injunction must always make the prima facie showing of substantial likelihood of success on the merits, see Siegel, 234 F.3d at 1176. 46 The principle guiding us is this: Where the ultimate burden of proof at trial is on the non-movant, the party seeking a preliminary injunction must nonetheless make some prima facie showing before the burden of production or proof shifts to the non-movant. See generally Deerfield Med. Ctr. V. City of Deerfield Beach, 661 F.2d 328, 336-38 (5th Cir. 1981) 9 . In litigation involving the Improvement Act, the movant may do this by applying the statutory presumption, and thereby demonstrating that a substantial number of the satellite carrier's subscribers presumptively fall outside of the narrow copyright license created by SHVA and the Improvement Act. See 17 U.S.C. § 119(a)(2)(B)(ii)(I). Pragmatically, this task should not be onerous because the satellite carrier is required under § 119(a)(2)(C) to submit its subscriber lists to the networks. See id. at (a)(2)(C). Based on such data, a network should be able to demonstrate which subscribers are presumptively served and unserved. Once presumptive noncompliance is established, the non- movant or satellite carrier may rebut the presumption with, for example, evidence of signal strength tests or waivers from local affiliates. Such a burden-shifting model ensures that the party opposing a preliminary injunction is not saddled with the burden of production, initially, and that the proponent of this extraordinary and drastic remedy is required to clearly establish the `burden of persuasion' as to the four requisites, Siegel, 234 F.3d at 1176. 47 Here, the court examined the Network's proffer of Jules Cohen's declaration. The court concluded that it w[ould] not rely on Mr. Cohen's maps or his Declaration testimony because Cohen's maps overstate the number of unserved households to which EchoStar transmits distant network programming by relying on an outdated code provision. The Cohen evidence was the only evidence proffered by the Networks' to carry their initial burden. 10 48 Having rejected the only evidence adduced by the Networks, the court turned to EchoStar's submission of Michael R. Hawkins's declaration and five supporting ILLR maps of Chicago, San Francisco, Washington, D.C., Dallas-Fort Worth, and Memphis. For purposes of the injunction, the court concluded it would accept as accurate Mr. Hawkins's Declaration testimony and his analysis of the ILLR maps. Based thereon, the court found that in five designated market areas, EchoStar likely provides distant network programming to thousands of households which are not `unserved.' 11 The court found that Hawkins' declaration established that at least 9,956 people in five markets - i.e., 25.27% of EchoStar's 39,397 subscribers in those markets - receive a signal of Grade B intensity or higher, and presumptively do not reside in unserved households. Based on Hawkins's declaration, the court found it presumptively established that at least 25.27% of EchoStar's customers were served, and that there was a substantial likelihood that the Networks could demonstrate that EchoStar was presumptively violating the Act. 49 The district court's approach was not much different than the burden-shifting model suggested above. The flaw we find, however, in the district court's analysis is its finding that the predicate burden is satisfied by evidence pertaining only to five markets that were tested by Hawkins. We conclude that the district court's extrapolation from these five markets to draw conclusions about satellite subscribers in two-hundred and thirty nationwide markets is not supported by the record. 12 There is no evidence in the instant record that the five markets are representative of Echostar's nationwide service, nor do the Networks point to other evidence that the district court's extrapolation is reasonable. 13