Second Circuit Denies En Banc Review of Aereo Decision

The U.S. Court of Appeals for the Second Circuit denied today a petition for review, en banc, of an earlier decision by a three-judge panel of the Court that had ruled in favor of Aereo and against broadcasters in a case that originated in the Southern District of New York.

On April 1, 2013, the panel concluded in the case that Aereo’s service did not violate the broadcasters’ exclusive right to “publicly perform” their copyrighted television programs. Broadcasters asked the full Second Circuit Court to review that decision, but a majority of judges declined to rehear the case. Two judges issued a strong dissent, explaining that the panel decision had “already had a significant impact on the entertainment industry” because it threatened to undermine the retransmission consent regime vital to broadcast television.

Although the order denying rehearing is a disappointment for broadcasters, the decision is limited to broadcasters’ request for a preliminary injunction on the “public performance” issue. The case against Aereo is moving forward in the district court, where the parties have asked the court to rule on other aspects of the broadcasters’ copyright claims.

In a case involving a similar Internet streaming service, FilmOn X (originally “Aereokiller”), a federal district court in California ruled in favor of broadcasters and granted a preliminary injunction prohibiting the service from operating within the states encompassed by the Ninth Circuit. FilmOn X has appealed that decision to the Ninth Circuit, which is scheduled to hear argument on August 27th.

Third Circuit Reaffirms Ruling on "Wardrobe Malfunction" Case

Today, the federal Third Circuit Court of Appeals issued an opinion in the Janet Jackson indecency case reaffirming its earlier decision that CBS owned and operated stations were not liable under the "indecency" statute for the broadcast of Janet Jackson’s "wardrobe malfunction."

The Third Circuit heard oral argument in the case more than a year ago, after the U.S. Supreme Court vacated the Third Circuit’s original decision and sent the case back to the Third Circuit for further consideration in light of the Supreme Court’s ruling in FCC v. Fox Television Stations, Inc., a case involving fleeting expletives.

By a two to one majority, the Third Circuit held today, as it had before, that the FCC’s sanction against CBS for the fleeting nude image was a departure from its policies on actionable indecency. In a win for broadcasters, the Court vacated in its entirety the Commission’s $550,000 penalty against the CBS owned stations.

U.S. Supreme Court to Hear Indecency Cases

As expected, the U.S. Supreme Court announced yesterday that it has agreed to hear the Fox (fleeting expletives) and ABC (fleeting nudity) cases in the next term. The Court has agreed to determine whether the FCC’s current indecency enforcement policy violates the free speech rights of broadcasters or is unconstitutionally vague. Justice Sotomayor did not participate in the decision to accept the cases for review.

We have previously written about the Supreme Court's initial decision in the Fox case, which centered upon whether the FCC's policy concerning fleeting expletives passed muster under the Administrative Procedure Act (the Court ruled that it did, in a 5-4 decision). The Supreme Court's action yesterday means it will now take up the First Amendment implications of the FCC's indecency regime, which the Court did not address in its initial decision.

We will follow the progress of this case closely.

Internet Company Enjoined from Streaming Broadcast Programming over the Internet

Earlier today, the federal district court in the Southern District of New York issued a preliminary injunction prohibiting ivi.tv from streaming the programming of the plaintiffs' television stations over the Internet or to mobile phones. The plaintiffs include television stations in New York and Seattle, the major television networks, major television studios, and Major League Baseball.

ivi.tv began live Internet streaming of the programming of television stations located in New York and Seattle on September 13, 2010, to subscribers located anywhere in the United States for a fee of $4.99/month. ivi claimed that it could do so because it was a "cable system" under the Copyright Act. ivi, however, claimed that it was not a "cable system" for purposes of the Communications Act and, therefore, did not need to obtain the retransmission consent of the affected stations.

The court concluded that it is "extraordinarily unlikely that ivi will ultimately be deemed a cable system" under the Copyright Act since ivi neither fit the traditional type of localized delivery systems that are entitled to rely on the statutory license nor agreed to be abide by the FCC's governing rules.

The court entered the following preliminary injunction:

Thus, plaintiffs’ motion for a preliminary injunction is granted and it is hereby ORDERED that defendants . . . and all other persons who are in active concert or participation with any of them who receive actual notice of this injunction by personal service or otherwise, are hereby ENJOINED from infringing by any means, directly or indirectly, any of plaintiffs’ exclusive rights under Section 106 (1) - (5) of the Copyright Act, including but not limited to through the streaming over mobile telephone systems and/or the Internet of any of the broadcast television programming in which any plaintiff owns a copyright.

The court's ruling remains operative during the pendency of the lawsuit.

FCC Takes Steps to Study "State of Media"

FCC Chairman Julius Genachowski  recently announced what the Commission is billing as an “agency-wide initiative to assess the state of media in these challenging economic times and make recommendations designed to ensure a vibrant media landscape.” The Chairman has appointed Steven Waldman to lead the effort. Waldman most recently served as President and Editor-in-Chief of Beliefnet.com, a faith-oriented website, and was a regular columnist for the online edition of the Wall Street Journal. According to an FCC News Release, Waldman will work with FCC bureaus to “lead an open, fact-finding process to craft recommendations to meet the traditional goals of serving the public interest and making sure that all Americans receive the information, educational content, and news they seek.”

In launching this initiative, the Commission is apparently responding to requests for FCC action by the Knight Commission on the Information Needs of Communities in a Democracy and a report on the “dire circumstances” of newspapers prepared by the Pew Project for Excellence in Journalism. Chairman Genachowski declared this a “pivotal moment in the history of media and communications” because of the development of new technologies and the financial downturn. According to the Chairman, “it is important to ensure that our [policies] promote a vibrant media landscape that furthers long-standing goals of serving the information needs of communities.” However, Genachowski acknowledged that the agency must be “scrupulous” about adhering to First Amendment principles that prohibit the government from dictating content.

At this stage, it is too soon to tell the level of resources the FCC will devote to this endeavor and whether any formal action will result. It is also unclear if this effort to assess the “state of media” has any relationship to a “state of journalism” document that Commissioner Copps was reportedly circulating in July. We reported on that document here. (According to news reports, Commissioner Copps’s item “examines the decline of broadcast journalism . . . and tries to explain why traditional forms of journalism have declined while other, newer forms have been on the rise.” No action has been taken on that item.)

We will update you as this initiative continues to develop.

FCC to Consider the State of Broadcast Journalism?

According to news reports, Commissioner Michael Copps is passing a document around the Federal Communications Commission concerning the “state of journalism.”  Although the report is not yet publicly available, CNSNews.com is reporting that it “examines the decline of broadcast journalism over the past several years and tries to explain why traditional forms of journalism have declined while other, newer forms have been on the rise.”

It appears that the report is tied to a formal (though not yet public) Notice of Inquiry.  Issuing an NOI is often the first step to initiate a formal agency rulemaking process whereby the government seeks comment from interested parties on a number of identified topics.  New regulations may or may not be issued at the conclusion of such a rulemaking procedure.

According to CNSNews.com, “[t]he decline of traditional print and broadcast outlets is the primary focus of the report, which analyzes which new outlets are picking up the slack – and why they might be eclipsing traditional news outlets.”  The document also apparently deals with broadcasters’ public interest obligations, which have long been touchstone issues for Commissioner Copps.  The NOI could be the first step in seeking to impose tougher public interest obligations on broadcasters.

While the NOI is not yet public, Commissioner Copps’s point of view on the “state of journalism” is well captured in public remarks he made earlier this year.

It’s too soon to tell how high a priority this possible “state of journalism” NOI will be for the nearly reconstituted FCC, now headed by Commissioner Julius Genachowski.  We will continue to monitor this story.

U.S. Supreme Court Vacates and Remands "Janet Jackson" Indecency Case to Third Circuit

The U.S. Supreme Court today set aside the broadcast industry's victory in the Janet Jackson indecency case.  In a two-sentence order (see case number 08-653), the Supreme Court granted the FCC's petition for writ of certiorari (we previously reported on the filing of the petition by the FCC), vacated the Third Circuit's decision that CBS owned and operated stations were not liable for the broadcast of Janet Jackson's infamous "wardrobe malfunction," and remanded the case back to the Third Circuit for further consideration in light of last week's Supreme Court decision in FCC v. Fox Television Stations, Inc.

The Supreme Court's Janet Jackson order is a disappointment to the broadcast industry, but the indecency battle will likely continue when the Third Circuit re-examines the Janet Jackson case in the future or when the Second Circuit rules upon the FCC's ability to sanction fleeting nudity in the pending NYPD Blue case.
 

Analysis of U.S. Supreme Court Decision Upholding FCC's Prohibition of Fleeting Expletives

In a 5-4 decision released April 28, 2009, the United States Supreme Court has upheld the FCC’s decision to find “fleeting expletives” actionably indecent in certain circumstances.  The immediate import of the decision is that even a single occurrence of the F-word or S-word outside of the safe harbor (10:00 pm to 6:00 am) may subject a television or radio station to fines up to $325,000.  We previously reported on the oral argument in this case when it occurred back in November.

The case, FCC v. Fox Television Stations, Inc., involved the single use of the F-word by Cher during the 2002 Billboard Music Awards show and the use of the F-word and S-word by Nicole Richie during the 2003 Billboard Music Awards show broadcast by the Fox Network and its affiliates.  The FCC found these uses to be actionably indecent because, following its decision in the Golden Globes decision (the Bono case), the 2003 broadcast involved a literal description of excrement and both broadcasts involved the F-word which inherently has a sexual connotation.  The FCC did not fine the Fox stations, however, because the broadcast occurred before the FCC announced its new policy regarding fleeting expletives in the Golden Globes case.

Upon review, the Second Circuit Court of Appeals held that the FCC had failed to offer a “reasoned basis” for its change in its new indecency policy.  The Second Circuit, accordingly, struck down the new policy as a violation of the Administrative Procedure Act (the “APA”) and noted that it was not necessary to reach the question whether the policy violated the First Amendment.  Nonetheless, the Second Circuit observed that it was skeptical that the FCC could articulate a rationale for the policy that would survive a First Amendment challenge.

The FCC, however, sought review of the Second Circuit’s decision by the Supreme Court, and the Court, in a very splintered decision, reversed the Second Circuit and held that the FCC’s “fleeting expletives” policy did satisfy narrow APA review.

Writing for a narrow five-justice majority, Justice Scalia stated that when an agency changes course, the course change is not subjected to a more searching review or any more heightened standard than when the agency had adopted its initial policy.  Only good reasons for the new policy need be articulated, not more substantial reasons than those required in the first instance.  Even a policy change tinged with constitutional overtones, like the fleeting expletives policy at issue here, is not to be subjected to a more stringent arbitrary-and-capricious standard of review. In those cases, the lawfulness of the policy change under the Constitution must be addressed in a separate constitutional challenge.

Applying this narrow scope of review to the FCC’s decision, Justice Scalia found that the FCC’s decision to find these two broadcasts actionably indecent was not arbitrary or capricious.  The FCC signaled it was making a change in the Golden Globes order, and its reasons for expanding the scope of its enforcement activity were deemed rational.  According to the majority, it makes sense not to distinguish between literal and nonliteral uses of offensive words, it is rational to believe that the former exception for fleeting expletives would likely lead to more widespread use of offensive language, the fact that it is now easier to bleep out offending words supports the stepped-up enforcement policy, and the FCC’s decision not to impose a forfeiture shows that the agency was not arbitrarily punishing parties without notice.

The Scalia majority rejected both the Second Circuit’s reasoning and the arguments of Fox and the other networks.  With respect to the FCC’s reliance on the harm to children, criticized by the Second Circuit, the majority stated that empirical evidence of any such harm is not necessary; all one needs to know is that “children mimic the behavior they observe.”  The Court also rejected the network’s contention that the FCC had effectively adopted a presumption of indecency, stating merely that the FCC’s “repeated reliance on context refutes this claim.”  The Court likewise did not accept the broadcasters’ characterization that the FCC’s appeal to “context” is a “smokescreen for a standardless regime of unbridled discretion.” Instead, the Court noted that its prior decision in FCC v. Pacifica Foundation approved FCC regulation based on a nuisance rationale under which context is all-important, and the APA does not mandate anything different.

Perhaps most importantly, the Scalia majority rejected the broadcasters’ argument that the FCC had gone beyond the scope of its authority as articulated in Pacifica:

[W]e have never held that Pacifica represented the outer limits of permissible regulation, so that fleeting expletives may not be forbidden.  To the contrary, we explicitly left for another day whether “an occasional expletive” in “a telecast of an Elizabethan comedy” would be prohibited.  By using the narrowness of Pacifica’s holding to require empirical evidence of harm before the Commission regulates more broadly, the broadcasters attempt to turn the sword of Pacifica, which allowed some regulation of broadcast indecency, into an administrative-law shield preventing any regulation beyond what Pacifica sanctioned. Nothing prohibits federal agencies from moving in an incremental manner.

(Emphases in original.)  Justice Scalia’s language suggests that he views Pacifica as only the opening wedge of the FCC’s authority to regulate indecency consistent with the First Amendment and not, as most observers, including the FCC itself for the first 25 years of indecency enforcement, as the confining enclosure limiting the constitutional scope of enforcement.

The majority, like the Second Circuit below, refused to the reach the First Amendment implications of the fleeting expletives policy.  Justice Scalia observed that its constitutionality “will be determined soon enough, perhaps in this very case.”  In the meantime, Justice Scalia concluded, “any chilled references to excretory and sexual material surely lie at the periphery of First Amendment concern.”

Justice Scalia was joined in the majority opinion by Chief Justice Roberts and by Justices Kennedy, Thomas, and Alito, although Justice Kennedy did not join in the section of the opinion criticizing the dissenting opinions.  Both Justice Thomas and Kennedy wrote concurring opinions.

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Supreme Court Upholds FCC's Ability to Prohibit the Broadcasting of Even a Single, Fleeting Expletive

In a question-begging 5-4 decision, a badly-fractured United States Supreme Court issued a ruling this morning in the Fox indecency case stemming from the isolated use of expletives (the “F-Word” and the “S-Word”) by Cher and Nicole Ritchie on live awards shows broadcast in prime time during 2002 and 2003.  A half dozen opinions were filed by the nine Justices on the High Court.

The FCC had determined that the broadcasts at issue were indecent, and the Second Circuit Court of Appeals had reversed the FCC on the grounds that the FCC’s decision was “arbitrary and capricious” under the Administrative Procedure Act.  Today's U.S. Supreme Court decision holds that, under the Administrative Procedure Act, the FCC’s indecency ruling was not arbitrary or capricious and that it is within the FCC’s authority to determine that even “fleeting” expletives may be indecent.

The Supreme Court’s majority opinion refused to address the First Amendment arguments made by broadcasters in this case and remanded the case back to the Second Circuit for a determination of whether the FCC’s new “fleeting expletives” policy is constitutional.  The Court’s decision means that this issue will continue to occupy broadcasters’ attention for the near future.
 

The Fairness Doctrine is Dead, Long Live the Fairness Doctrine

With the arrival of a new presidential administration, and with the explosive growth of alternative ways for people to get their daily news and opinion, a legal issue once thought settled is again in the headlines.

The “Fairness Doctrine,” first imposed by the Federal Communications Commission in 1949, required television and radio broadcast stations to give reasonable opportunity for the discussion of conflicting views on issues of public importance.

In 1987, the FCC ruled that the doctrine violated the First Amendment and did not serve the public interest because it: (1) discouraged broadcasters from covering controversial issues of public importance, (2) lessened the flow of diverse viewpoints to the public, and (3) was unnecessary due to technological developments, including the growth in the number of radio and television stations and the expansion of cable television.

With the rise of conservative talk radio in the 1990s, a small group on the political left began to clamor for a re-examination of that decision. The clamoring increased considerably during the 2008 presidential election, especially as Democrats gained control of Congress and the White House.

In response, politicians of all stripes and free speech advocates have made clear that they view the Fairness Doctrine as profoundly unfair to the First Amendment.

Finally, in late February, the Senate overwhelmingly passed an amendment that would prohibit the FCC from reinstating the doctrine. This after President Obama made clear that he did not support any move by the FCC to re-open the issue.

Nonetheless, people like FCC Commissioner Robert McDowell are concerned that the Fairness Doctrine may return in another form and with another name (e.g., “localism,” or net neutrality). You can read his speech to the Media Institute here.

Finally, click here for a speech on the Fairness Doctrine by one of our colleagues, Mark Prak.  He was invited to speak at the John Locke Foundation, and he provided a brief history of the doctrine's rise and fall, along with his views of the current debate.