Opinion ID: 688683
Heading Depth: 2
Heading Rank: 1

Heading: Alleged Misrepresentations by Fox

Text: 16 Appellants argue that Fox made a serious misrepresentation by falsely implying that there was a June 1, 1993, deadline based on the termination date of the court-approved management agreement and that the FCC conceded that some of these statements by Fox, while technically accurate, were potentially misleading and overstatements. Appellants assert that the Commission's decision that no further inquiry was required because there was no evidence of deceptive intent by Fox is untenable because the filing of the actual management agreement with the FCC, which contained the thirty-day extension provision, was insufficient to counteract the effect of Fox's repeated statements about the June 1 deadline. As further evidence of Fox's alleged duplicity, appellants point to the fact that Murdoch's lawyer told the bankruptcy court that Murdoch was prepared to extend the extra thirty days if necessary to obtain the FCC waiver. Appellants argue that this constitutes prima facie evidence of Fox's intent to deceive, see David Ortiz Radio Corp. v. FCC, 941 F.2d 1253, 1260 (D.C.Cir.1991) (fraudulent intent shown by misrepresentation coupled with proof that party making it knows it is false), and assert that the FCC improperly failed to order a hearing on Fox's misrepresentation. See California Pub. Broadcasting Forum v. FCC, 752 F.2d 670, 680 (D.C.Cir.1985) (FCC's denial of a hearing on a substantial and material factual dispute on issue of misrepresentation was arbitrary and capricious). Moreover, appellants claim the FCC erred in assuming that the evidence must prove an intent to deceive before a hearing is required. See Citizens for Jazz on WRVR, Inc. v. FCC, 775 F.2d 392, 397 (D.C.Cir.1985) (to warrant a hearing, allegations must merely present a substantial and material question of fact, not actually prove misrepresentation). 17 Similarly, appellants assert that the FCC arbitrarily and capriciously departed from precedent by denying a hearing on the alleged misrepresentation by Fox about the existence of other potential purchasers, especially since the Commission admitted that some of Fox's statements in this regard were troubling. They also allege that the FCC's conclusion that there was not a substantial question on Fox's misrepresentation on this issue is not tenable, especially given the Commission's long-established requirement that applicants be scrupulous in providing complete and meaningful information.... Lorain Journal Co. v. FCC, 351 F.2d 824, 830 (D.C.Cir.1965), cert. denied, 383 U.S. 967, 86 S.Ct. 1272, 16 L.Ed.2d 308 (1966). Appellants also claim that Fox has shown a pattern of misrepresentation in its actions in a comparative renewal proceeding for KTTV, Los Angeles, and that the FCC erred in refusing to order further inquiry into this behavior. 18 The Administrative Procedure Act, 5 U.S.C. Sec. 701 et seq. (1988), provides that a court must uphold a federal agency's action unless it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Id. at Sec. 706(2)(A). Under this deferential standard, we must determine whether the agency has articulated a rational connection between the facts found and the choice made [and] may reverse only if the agency's decision is not supported by substantial evidence or the agency has made a clear error in judgment. Kisser v. Cisneros, 14 F.3d 615, 619 (D.C.Cir.1994) (internal quotation marks and citations omitted). 19 The FCC will hold a hearing only when a dispute is clearly and adequately alleged, is factual, and rises to the level of a substantial and material issue. David Ortiz Radio Corp., 941 F.2d at 1257. In reviewing the FCC's denial of a requested hearing, we play only a limited role because the FCC's discretion and expertise are paramount in this sphere. Id. The FCC argues that a hearing on the misrepresentation issue was unnecessary because appellants challenge only the inferences that the FCC drew from uncontested facts. See National Ass'n for Better Broadcasting v. FCC, 591 F.2d 812, 815 (D.C.Cir.1978) (hearing not required to resolve disputes over the proper inferences to be drawn from agreed-upon facts). This court, however, has held that the question of intent to mislead is a factual one which, if substantial, will justify an evidentiary hearing. See California Public Broadcasting Forum v. FCC, 752 F.2d 670, 679-80 (D.C.Cir.1985); Citizens for Jazz on WRVR, Inc., 775 F.2d at 395-96. The question, then, is whether appellants presented such strong circumstantial evidence of misrepresentation as to justify reversing the Commission's judgment that the ultimate question was not a substantial one. Citizens for Jazz on WRVR, Inc., 775 F.2d at 396. 20 The FCC carefully considered all of appellants' allegations, evaluated the record, and determined that there was not a substantial and material issue regarding Fox's intent to mislead by its statement that a decision by June 1 was imperative. The statements by Fox can fairly be characterized as bombast rather than outright falsehoods, and the FCC relied on other evidence in the record suggesting that Fox did not actually attempt to mislead the FCC on the relevant issues. See Citizens for Jazz on WRVR, Inc., 775 F.2d at 395 (FCC must weigh the allegations of misrepresentation against the other evidence before it and then decide whether there is a substantial question of fact such that the totality of the evidence arouses a sufficient doubt on the point requiring further inquiry). Accordingly, the FCC's conclusion that allegations regarding Fox's misrepresentations did not raise a material issue requiring a hearing was not arbitrary and capricious or unsupported by the record. See WHW Enters., Inc. v. FCC, 753 F.2d 1132, 1139 (D.C.Cir.1985) (in reviewing FCC's application of standards for candor and forthrightness, court looks only to see whether Commission's conclusions and findings are supported by the record and are not arbitrary and capricious). 21 Likewise, the FCC considered appellants' allegations that Fox misrepresented the non-existence of other potential purchasers and concluded that Fox stated that there were no other viable buyers for the Post. Later events, although not determinative of Champion's qualifications at the time of the waiver request and the FCC's decision, appear to have borne out Fox's conclusion that Champion was not a viable bidder for the Post. While Champion did offer to buy the paper, its proposal was rejected by the Post's committee of unsecured creditors as deficient in price and insufficient in working capital. Champion actually withdrew its offer to buy the Post three months before the bankruptcy court made its final decision. Moreover, Murdoch was the only bidder for the paper before the bankruptcy court, a fact which supports the reasonableness of the Commission's conclusion that Fox did not engage in a misrepresentation when it stated that Murdoch was the only viable bidder. 22 As for the licensing proceeding in Los Angeles, while the Review Board found that Fox violated FCC rules, the Commission ultimately rejected the Review Board's findings in this matter. See Fox Television Stations, Inc., 9 F.C.C.R. 62 (1993). Accordingly, the FCC did not act in an arbitrary or capricious manner in determining that the allegations regarding Fox's misrepresentation in the renewal proceeding did not require a hearing. 23