Opinion ID: 4549821
Heading Depth: 2
Heading Rank: 4

Heading: Distribution methodologies

Text: Finally, IPG objects to the final royalty distribution methodologies selected by the Judges, contending that the Judges had previously rejected those very methodologies for insufficient evidence. It also argues that the exclusion of IPG’s expert reports as noncompliant with the Judges’ published rules elevated “form over substance” and, because it left IPG’s claims fatally unsupported, was an abuse of discretion. Appellant’s Br. 70. We hold that the Judges’ distribution 20 methodology decisions were well “within a zone of reasonableness.” Settling Devotional Claimants, 797 F.3d at 1114 (quotation marks and citation omitted). First, the Judges were within their discretion in holding that IPG’s expert reports failed to conform to the Judges’ published regulations in that IPG failed to attach copies of prior testimony that it wished to designate in the new proceeding. See 84 Fed. Reg. at 16,040 n.12 (citing 37 C.F.R. § 351.4(b)(2)). The Judges fairly allowed IPG to use the reports in cross-examining the SDC and MPA’s experts, but IPG failed to undermine the experts. When the Judges faulted IPG for lacking evidence or expert analysis to rebut the SDC and MPA’s experts, they were not automatically ruling against IPG for its want of an expert, but legitimately noting that “[c]riticism by IPG’s counsel is not a substitute for expert rebuttal testimony.” Id. at 16,046. Second, the Judges reasonably adopted the SDC and MPA’s methodologies once they both fixed the evidentiary problems the Judges had initially identified. The Judges must apportion royalties among rightsholders for specific programs in each program-category pool. To do so, they must determine the relative marketplace value of those programs—a calculation highly dependent on viewership. See Indep. Producers Grp., 792 F.3d at 142. For cable and satellite retransmission royalties, the relevant viewership data quantify distant viewership, as the royalties are for retransmissions elsewhere of locally aired programs. The Judges initially faulted MPA and the SDC for lacking data showing a correlation between local ratings and distant viewership sufficient to justify quantifying distant viewership as a function of local ratings. See Order Reopening Record at 2-5. 21 MPA’s methodology apportioned royalties in the program suppliers category based on the respective number of hours that cable and satellite subscribers viewed MPA-represented and IPG-represented programs. 84 Fed. Reg. at 16,042. Because obtaining distant viewership data for every year was prohibitively expensive, MPA’s expert initially used local viewing data from 2000 to 2009 and distant viewing data from 2000 to 2003 to calculate the relationship between them and used that formula to predict distant viewership for the years such data were unavailable. See Order Reopening Record at 3. The Judges held that there were too many reasons the relationship between known local and distant viewing data from 2000-2003 would not validly project unknown distant viewership based on known local viewership data for the 20042009 period. They found the evidence inadequate without either (1) more contemporaneous data from which to derive a relationship or (2) other evidence that could persuade the Judges such data were not needed for the methodology to be reliable. Id. at 4. In the new hearing, MPA supplied distant viewership data from 2008-2009, 84 Fed. Reg. at 16,042, and its expert relied on the new and previously submitted data to explain that the relationship between local and distant data observed from 2000 to 2003 did not change significantly for the period from 2008 to 2009, see id. at 16,043. The Judges reasonably held that the additional two years of distant viewing data beyond what was submitted in the initial hearing satisfied their first concern, and the similarity of the relationship rendered reliable the expert’s extrapolation regarding the years for which data remained unavailable. See id. The Judges reasonably accepted the new evidence as remedying their earlier evidentiary concerns and adopted the methodology. The Judges had initially faulted the SDC’s methodology for similar problems, as its expert, extrapolating from local data from the periods in question, relied on distant viewing data 22 limited to February 1999 for what the expert claimed was a statistically significant correlation between local and distant viewership. Order Reopening Record at 5. The Judges concluded that the SDC’s methodology suffered from a “critical lack of data,” both because there was no evidentiary basis to conclude that a correlation “in the 1999 data continues unchanged throughout the entire succeeding decade” and because, even for the local data, the SDC’s expert had relied on evidence from a single month in each year from 1999 to 2003. Id. As it had with MPA’s data, the Judges held the SDC’s methodology faulty absent more contemporaneous distant viewing data and more local ratings data, or grounds to conclude such data were not necessary. Id. In the reopened proceeding, the SDC remedied both those evidentiary deficiencies to the Judges’ satisfaction. The SDC’s expert added distant viewership data from 1999 through 2003 at four different times during in each year. 84 Fed. Reg. at 16,045. And he gathered complete local data for the years 2004 to 2009 and used the data to demonstrate that program ratings from a single month (i.e., February) were representative of ratings throughout the year. The Judges held that the SDC and MPA’s additional data “presented a quantum of persuasive evidence and analysis demonstrating a positive correlation between local ratings and distant viewing that is consistent over time.” Id. at 16,046 (emphasis added). IPG has offered no evidence or argument that calls into question the reasonableness of the Judges’ conclusion, other than to raise a broadside objection to any viewership-based methodology in Phase II proceedings—an objection that we have repeatedly rejected. See, e.g., Settling Devotional Claimants v. CRB, Nos. 15-1084, 15-1093, 2017 WL 1483329, at  (D.C. Cir. Feb. 10, 2017); Indep. Producers Grp., 792 F.3d at 142. 23