NOTICE ********************************************************* NOTICE ********************************************************* This document was originally prepared in Word Perfect. If the original document contained-- * Footnotes * Boldface & Italics --this information is missing in this version The document format (spacing, margins, tabs, etc.) is changed too. If you need the complete document, download the Word Perfect version. For information about downloading documents (FTP) see file pnmc5021. File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************** *** ******** $//Rem Malloy Broadcasting, Raleigh, NC, MO&O, MM Docket No. 88-306, 95R-8 //$ $/500.3110 Failure to Prosecute/$ $/73.3568 Dismissal of Application/$ ///newjob/// $///FCC 95R-8,4/27/95///$ FCC 95R-8 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 MM Docket No. 88-306 In re Applications of Henry R. Malloy, Jr., d/b/a REM MALLOY BROADCASTING ) File No. BPH-880627MH PEEBLES BROADCASTING COMPANY ) File No. BPH-860603ME James S. Lee and Donald L. Baker, d/b/a INTERACTIVE MEDIA ) File No. BPH-860707MS FREE AIR CORPORATION ) File No. BPH-860707NH BERNARD DAWSON ) File No. BPH-860707NW SPECIAL MARKETS MEDIA, INC. ) File No. BPH-860703MH For Construction Permit for New FM Station, Channel 275A, Raleigh, North Carolina MEMORANDUM OPINION AND ORDER Adopted: April 21, 1995 Released: May 1, 1995 By the Review Board: MARINO (Chairman) and GREENE. 1. The Review Board has before it for consideration: (1) an Appeal filed February 27, 1995, by Free Air Corporation from a Memorandum Opinion and Order, FCC 95M-60, released February 23, 1995, (MO&O), by Administrative Law Judge Joseph Chachkin (ALJ), dismissing Free Air's application; and (2) Free Air's Motion to Stay filed on the same date requesting a stay of the effectiveness of the above order. Joint Oppositions to the Appeal and Motion to Stay were filed on March 3, 1995, by Peebles Broadcasting Company, Interactive Media, and Bernard Dawson. For the reasons set forth below, we will deny the appeal and dismiss the stay as moot. 2. On a joint motion to dismiss filed February 3, 1995, by all of the opposing applicants, the ALJ dismissed Free Air's application for failure to prosecute because Free Air elected not to exchange any direct evidence on a financial qualifications issue designated against it or to appear at the January 31, 1995 hearing scheduled for trial of the issue. That issue, along with a basic qualifying issue against Rem Malloy Broadcasting, had been added by the Board on September 12, 1994, in an order remanding the case to the ALJ. Memorandum Opinion and Order, 9 FCC Rcd 4822 (Rev. Bd. 1994), pet. for extraordinary relief dismissed, 10 FCC Rcd 503 (1995). At a conference held on November 2, 1994, the ALJ extended the procedural schedule previously established in this case, after counsel for Free Air produced an October 1994 physician's affidavit averring that Olga Castellanos, Free Air's fifty percent owner, was recovering from breast cancer surgery performed on October 17 and would not be able to appear for deposition until the latter part of December 1994. MO&O at  2. In moving to dismiss the remanded issue, Free Air had claimed that Castellanos was the principal solely responsible for Free Air's financial certification. The ALJ also denied a subsequent joint motion for continuance filed by two other applicants, who complained they had been unable to depose Castellanos. Although Free Air supported the motion, it offered no documentation of Castellanos' medical condition, and the ALJ saw no reason to delay the hearing relative to Rem Malloy. Memorandum Opinion and Order, FCC 95M-4, released January 9, 1995. Notwithstanding the ALJ's extension of the original procedural dates to accommodate Castellanos, Free Air did not exchange its direct case exhibits on January 17, 1995, the revised date set for the exchange of exhibits. Instead, on that date, Free Air filed a motion to delete the financial issue specified by the Board, asserting that Castellanos would be unable to testify at hearing and that Free Air would rest its case on the motion to delete. Id. at  4. Free Air again offered no medical certificate to support its opposition. Free Air did not attend the hearing, which the ALJ had rescheduled to January 31, 1995. It submitted a letter to the ALJ on January 30 declaring that it would not be present at the hearing and repeating its representation that it would rest its case on the motion to delete. Id. The ALJ refused to grant the motion to delete because substantial questions of fact remained to be resolved. Memorandum Opinion and Order, FCC 95M-48, released February 14, 1995. 3. In dismissing Free Air's application, the ALJ held that Free Air's proffered justification centering on Castellanos' health provided no valid excuse for its failure to comply with his order. MO&O, at  8. He stated that "Castellanos' health did not explain Free Air's failure to exchange its direct case" nor did it "explain Free Air's unwillingness to offer the testimony of other essential witnesses." Id. Free Air never sought a continuance predicated on Castellanos' health or other grounds, nor did it submit a further medical report on Castellanos' health after the doctor's statement of October 1994. Id. & n.8. The ALJ concluded that the proffered justification was a pretext and that "Free Air's real reason for not offering evidence on the financial issue added by the Board [was] its unwillingness to subject its financial showing to the scrutiny of its opponents." Id. at  8. The ALJ also rejected Free Air's argument that denial of the application, rather than its dismissal, was the appropriate course of action if an applicant had no reasonable excuse for not appearing at hearing. Id. at  9. Finally, he analyzed Free Air's putative misconduct under the standards for dismissal set forth by the Court of Appeals for the District of Columbia Circuit in Comuni-Center Broadcasting, Inc. v. FCC, 856 F. 2d 1551, 1554 (D.C. Cir. 1988), stating: [G]iven the fact that Free Air has already been afforded an opportunity to come forward with the evidence to meet its burden on the issue added by the Board, which it has spurned, burdening the administrative system further with its application would be an unconscionable waste of the Commission's time and resources. Also, there would be manifest prejudice to Free Air's opponents if they were required to participate in yet another hearing session on Free Air's financial qualifications merely because Free Air defied the Presiding Judge's procedural order. Finally, dismissal of Free Air's application serves the public interest since it will have a deterrent effect on counsel who defy ALJ orders. MO&O, at  11. 4. Free Air contends in its appeal, citing GAF Broadcasting Co., 96 FCC 2d 411 (Rev. Bd. 1984), that "the dismissal of an application is not warranted where the purported failure to prosecute results from a principal of the applicant not testifying because of a medical problem and where the ALJ had refused to grant a continuance on the basis of such medical problem." Br. at 3. Free Air argues that, because the ALJ had already denied a continuance, "it would have been futile for Free Air to make another request or to submit an additional affidavit from a doctor." Id. at 4. It also argues that it would have been "futile" to submit a partial case since the ALJ considered Castellanos to be an essential witness, and thus, perforce, it had no choice but to prosecute its case through a motion to delete the financial issue. Id. Free Air's final contention is that there is no factual or legal basis to dismiss its application. Br. at 5. 5. Discussion. Free Air's reliance on GAF for reinstatement of its application is misplaced. There, the presiding ALJ refused to allow a continuance of the hearing where it was alleged that an essential witness, who had been taken ill during his testimony, was unavailable to continue testifying because of poor health. The request for the continuance was supported by a letter from the witness' physician stating that the witness could not testify until the end of summer, and the physician had sent a telegram advising the ALJ he had ordered his patient not to testify at the scheduled hearing. The Board held that the ALJ's ruling was arbitrary and an abuse of discretion. 96 FCC 2d at 413  5. Additionally, the GAF applicant had diligently continued to pursue its application, first by submitting the witness, and when he was unable to finish his testimony and the ALJ would not continue the case, by attempting to proceed on schedule with a substitute witness to sponsor the financial exhibit. Here, in contrast, Free Air never sought a continuance or submitted a status update of Castellanos' condition, and it made no attempt to pursue its application by meeting the issue. 6. A presiding ALJ has broad discretion in regulating the course of a hearing and will be overturned only if his ruling is arbitrary or an abuse of discretion. See GAF Broadcasting, 96 FCC 2d at 413. In disallowing the continuance sought by the other parties, the ALJ noted that the proponents seeking the continuance failed to make a showing for delaying the hearing concerning Rem Malloy. FCC 95M-4 at  6. Free Air's argument that it would have been "futile" for it to ask for a continuance or to submit an affidavit from the physician is disingenuous. The ALJ had demonstrated at the November 2 conference that he was amenable to suggestions from the parties concerning various courses of action that would resolve the financial issue against Free Air in an orderly and timely fashion and not jeopardize Castellanos' health. He extended his original procedural dates by adding in the recovery time estimated by Castellanos' physician before she could be deposed. He suggested that the parties contact Castellanos' physician to determine when it would be permissible to take Castellanos' deposition and recommended they might be able to minimize the time and burden of the deposition by deposing Castellanos at her Florida home. Tr. 2522-23. He asked the parties for their views about commencing the hearing toward the end of January or early February 1995 and received no objection from counsel for Free Air. Tr. 2527-28. Having failed to seek a continuance or to submit any updated information from Castellanos' physician on Castellanos' physical condition, Free Air can not complain on appeal that the ALJ's denial of the other parties' request for a continuance -- based on Free Air's failure to cooperate with Castellanos' deposition - - was arbitrary or an abuse of discretion. 7. Finally, Free Air's argument that it would have been "futile" to submit a partial case and that it had no choice but to seek deletion of the issue is also without merit. Other than the bare statement that Castellanos was considered an "essential" witness, Free Air, as noted by the ALJ, offered no explanation why it could not exchange its direct case or offer the testimony of other witnesses. In the Memorandum Opinion and Order, 10 FCC Rcd 503, supra, dismissing Free Air's and Rem Malloy's requests for extraordinary relief seeking reversal of our order adding the issues, the Commission pointed out that "a party may request relief pursuant to summary decision procedures before the ALJ to correct any alleged factual errors underlying the Board's determination to add financial issues against these applicants." 10 FCC Rcd at 505  11. The ALJ found it baffling, in dismissing Free Air's motion to delete, that Free Air failed to avail itself of the summary decision procedures, but noted that, in any event, if a summary decision motion had been based only on the attachments to the motion to delete, it could not have been granted because the attachments showed there are genuine issues of material fact for determination at a hearing. Memorandum Opinion and Order, FCC 95M-48, supra, at n.3. From our own review of that showing, we agree there was ample basis for the ALJ to find that substantial and material questions of fact continued to exist as to Free Air's financial qualifications. Finally, the ALJ persuasively explained in detail how his dismissal ruling satisfied the factors enumerated in Comuni-Center in determining whether dismissal is warranted. His action dismissing Free Air's application rather than simply denying it fully comports with Commission precedent. See, e.g., Beth Knight, 7 FCC Rcd 1889 (Rev. Bd. 1992) (application dismissed where applicant indicated it would not present evidence on issue allegedly wrongly added); review denied, 7 FCC Rcd 5975. 8. ACCORDINGLY, IT IS ORDERED, That the Appeal, filed February 27, 1995, by Free Air Corporation IS DENIED; and that Free Air's Motion to Stay filed on the same date IS DISMISSED as moot. FEDERAL COMMUNICATIONS COMMISSION Marjorie Reed Greene Member, Review Board