September 25, 2001
|Re:||Request for Stay of Order in Liberty Productions, A Limited Partnership, FCC 01-129, MM Docket 88-577.|
I respectfully dissent from the denial of a stay of Liberty Productions, FCC 01-129. In this instance, I believe a stay is justified given the petitioner's substantial likelihood of success upon the merits, as well as a balancing of the relevant harms. I am concerned that the Commission has failed to give enough deference to the findings of the Administrative Law Judge who took the testimony in this case. I also believe the Commission has given insufficient attention to the potential inequity to the current broadcaster, Orion Communications, Ltd., if it fails to issue a stay in this 11-year proceeding.
I. PROCEDURAL HISTORY
On May 4, 1990, an Administrative Law Judge granted, under comparative criteria, the application of Orion, an entity controlled by Zebulon Lee, for a new FM station at Biltmore Forest, North Carolina. In that decision, the ALJ disqualified Liberty Productions, a mutually exclusive applicant, finding that Liberty principals had intentionally misrepresented the availability of the tower site. The ALJ concluded that
[t]he record clearly justifies the conclusion that when Valerie Klemmer (a Liberty principal) represented to the Commission that Liberty had available the transmitter site specified in their application, she had absolutely no basis for doing so. Moreover, she knew she had no basis for doing so.
National Communications Industries, 5 FCC Rcd 2862, 2879 (1990). The ALJ conditioned grant of the application on divestiture of the Lee Family's only other broadcast radio interest, which was located in the same market as the Biltmore Forest FM station. Id. at 2881. The Review Board upheld the ALJ's decision following a de novo review of the record evidence. National Communications Industries, 6 FCC Rcd 1978 (Rev. Bd. 1991). The Commission, too, upheld the ALJ's determination that Liberty was not basically qualified. National Communications Industries, 7 FCC Rcd 1703 (1992). Thus, three separate reviews concluded that Liberty was not qualified to own a license. The Lee family then divested its other radio station, as required by the ALJ's Order, and commenced operation of the Biltmore Forest Station.
Liberty (among other losing applicants) appealed the Commission decision to the U. S. Court of Appeals for the District of Columbia Circuit. While this appeal was pending, the D.C. Circuit decided in an unrelated case that the Commission's application of the integration criterion to comparative hearings was arbitrary and capricious. Bechtel v. FCC, 10 F.3d 875 (D.C. Cir. 1993).1 The D.C. Circuit, however, did not overturn the Commission's character policy, which has long held that an applicant who intentionally misrepresents facts on an application lacks the character qualifications to be a Commission licensee. Nor did the court reach any other issue relevant to this case. See, e.g., Policy Regarding Character Qualifications in Broadcast Licensing, 102 FCC 2d 1179 (1986). In light of Bechtel, the D.C. Circuit remanded all comparative proceedings before the D.C. Circuit-including the underlying case at issue here-to the Commission for further consideration, and ordered that all other pending comparative hearings before the Commission be resolved consistent with the D.C. Circuit's holding. On February 25, 1994, the Commission announced that it would "hold in abeyance the processing of applications and the adjudication of hearing proceedings" while it determined how to implement the D.C. Circuit's order. Public Notice, FCC Freezes Comparative Proceedings, 9 FCC Rcd 1055 (released February 25, 1994).
During this period, Orion, which had begun the process of building out the station at Biltmore Forest, was eventually awarded interim operating authority, as well. Orion Communications Ltd. v. FCC, 131 F.3d 176, 181 (D.C. Cir. 1997).
Approximately a year following the award of interim operating status, the Commission adopted a new method for awarding licenses to resolve all the pending comparative cases: a competitive bidding procedure. Implementation of Section 309(j) of the Communications Act - Competitive Bidding for Commercial Broadcast and Instructional Television Fixed Services Licenses, 13 FCC Rcd 15920 (1998), recon denied, 14 FCC Rcd 8724 (1999), aff'd sub nom, Orion Communications, Ltd. v. FCC, 213 F.3d 761, mem., 221 F.3d 196 (D.C. Cir. 2000). In determining how to resolve the pending Biltmore Forest case at issue here, the Commission decided to auction the construction permit first and then, if necessary, resolve any qualifications issues involving the winning bidder. Liberty Productions, FCC 99I-11 (Released May 12, 1999). This was the only case in which the Commission permitted a party who had been found lacking in basic character qualifications nevertheless to participate in the auction.
The auction closed in October of 1999 with Liberty as the highest bidder. The Commission then addressed Liberty's qualifications, revisiting the decision of the ALJ that Liberty had made intentional misrepresentations to the Commission. Now, more than ten years after the ALJ assessed the evidence and credibility of the witnesses first-hand and concluded that Liberty had engaged in intentional deceit and did not have a site available-and several years after both the Review Board and the Commission affirmed that ALJ's decision-the Commission concluded that the ALJ's finding was not supported by substantial evidence. Liberty Productions, FCC 01-129, 55 (Released May 25, 2001). This new conclusion conflicted with the finding of the ALJ years before, and with the specific testimony the Review Board had previously credited. It, however, paved the way for the Commission to grant Liberty's application.
As noted by the majority, determination of whether a stay is appropriate must be based on a balancing of four factors: (1) the likelihood that the parties seeking a stay will prevail on the merits of their appeal; (2) the likelihood that the moving party will be irreparably harmed absent a stay; (3) the prospect that others would be harmed if a stay is granted; and (4) the public interest in granting a stay. Wisconsin Gas Co. v. FERC, 758 F.2d 669, 673-674 (D.C. Cir. 1985), citing Virginia Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958). "The traditional stay factors contemplate individualized judgements in each case," and "the formula cannot be reduced to a rigid set of rules." Standard Havens Products v. Genco Industries, 897 F.2d 511, 512 (Fed. Cir. 1990), citing, Hilton v. Braunskill, 481 U.S. 770, 777 (1987) "In considering whether to grant a stay pending appeal, [a] court assesses [the] movant's chances for success on appeal and weighs the equities as they affect the parties and the public." Standard Havens Products v. Genco Industries, 897 F.2d at 513, citing, E.I. Dupont De Nemours and Company v. Phillips Petroleum Company, 835 F.2d 277, 278 (1987).
III. ORION HAS A SUBSTANTIAL LIKELIHOOD OF SUCCESS ON THE MERITS
In evaluating the likelihood of success on appeal, the petitioner need "not establish an absolute certainty of success." Iowa Utilities Board et al v. Federal Communications Commission, 109 F.3d 418, 423 (8th Cir. 1996), citing, Population Institute v. McPherson, 797 F.2d 1062, 1078 (D.C. Cir. 1986). Rather, as the plain language of the test indicates, a petitioner need only demonstrate that success is "likely" on the merits. As discussed below, I believe that a substantial likelihood of success exists.
First, the Commission took the highly unusual step of reviewing the record evidence relating to an issue that was not part of the D.C. Circuit's remand decision. As explained supra, the D.C. Circuit remanded this case as one of many before the court that involved comparative hearings, with instructions to the Commission to review its decisions in light of the court's finding that an aspect of the FCC's comparative hearing process was arbitrary and capricious. The Commission in this case, however, reconsidered not just the aspects relating to the comparative hearing process, but also the findings relating to character. This step was odd for several reasons. First, the D.C. Circuit had not addressed the Commission's longstanding character policy, and thus it was not at issue. Second, the ALJ's finding with respect to character was an important factor in the ALJ's decision that Liberty was not qualified to own a license, and the evidence relating to Liberty's misrepresentation was the basis for the determination that no site was available. That decision, and the reliance upon testimony that explicitly contradicted Liberty's sworn testimony, had been affirmed by both the Review Board and the Commission. Third, the Commission's revisiting of the character issue required assessing the credibility of witnesses in testimony collected by the ALJ, in person, over ten years ago. Fourth, this was the only case in which the Commission permitted a party who had been found lacking in basic character qualifications to participate in the auction.
Yet, the Commission's action was not merely unusual, it also was unsupported by precedent. No specific authority justifies the Commission's new review of an ALJ's findings when those findings formed the basis of a decision that ultimately was affirmed by both the Review Board and the Commission. There can be no question that the ALJ's finding that there was no site availability-the issue upheld by the Review Board and the Commission-was based on the ALJ's determination that Liberty lied when it said it had a site available.
The Commission alleges that a new review of the ALJ's findings was warranted because the Review Board and the previous Commission had failed to make specific findings with respect to the ALJ's conclusion that Liberty had misrepresented site availability. Liberty Productions, FCC 01-129, 50-51. Yet, the Review Board and Commission did find that there was no site available, which necessarily discredited Liberty's sworn testimony. Indeed, the Review Board made a specific factual finding crediting the very testimony upon which the ALJ based his finding of misrepresentation:
The ALJ found that Liberty never had reasonable assurance that the site which it specified in the application was available, and that its principal falsely certified that the transmitter site was available because "she had absolutely no basis for doing so. Moreover, she knew she had no basis for so certifying." His findings and conclusions were based on the verified statement and deposition testimony of the site owner. Her testimony was in turn corroborated by the fact that other applicants who  sought permission to use the land were required to enter into a written lease…Like the ALJ, we find no reason in the record to reject the firm denial of the site owner that she had ever given assurance to Liberty that the property would be available, especially where twice before she had insisted on written agreements.
National Communications Industries, 6 FCC Rcd at 1979 (Review Board 1991)(emphasis added). See, also, National Communications Industries, 7 FCC Rcd at 1704 (Commission affirming the ALJ’s conclusion that Liberty was not basically qualified to be a Commission licensee). Thus, both the Review Board and the Commission made findings that credited the testimony of the witnesses upon which the ALJ’s finding of misrepresentation was based—findings that could not have been made without discredited Liberty’s testimony. The Review Board, moreover, specifically discrediting Liberty’s testimony by finding “no reason in the record” to reject the site owner’s testimony.
The Commission should have deferred to these findings. Instead, it appears that the Commission reweighed the record evidence. This is particularly troubling since the initial trier of fact had taken the testimony and released a decision approximately ten years earlier. The Commission routinely defers to the ALJ's factual findings on matters of credibility. As Commissioner Tristani noted in her dissent to the underlying decision,
De novo review is not trial de novo. Thus, while de novo review authorizes a review of the whole record without deference to facts found by the ALJ, there can be no doubt that our law universally favors disposition of credibility and motive by the person or body that hears the testimony.
Dissenting Statement of Gloria Tristani, Liberty Productions, FCC 01-129.
The Commission, in arguing that the ALJ's findings were entitled to no deference in this instance, claimed that the ALJ failed to make specific credibility findings. Liberty Productions, FCC 01-129, 20. This assertion is incorrect. The ALJ found that Liberty's arguments "strained credulity." National Communications Industries, 5 FCC Rcd at 2879. Moreover, the ALJ found that she "blatantly dissembled in a manner" not befitting a Commission licensee. One can easily infer from such findings that the ALJ did assess the credibility of the Liberty witness before him. Moreover, there is no general requirement that the ALJ make a more specific credibility finding. Without such a requirement, the Commission's decision to reverse a prior Commission affirmance of the ALJ's conclusions seems problematic.
The Commission's analysis of the record evidence also raises additional questions. For instance, the Commission stated that substantial evidence did not support a finding of deceit on the part of Liberty. However, the Commission has long held that "the fact of misrepresentation coupled with proof that the party making it had knowledge of its falsity [is] enough to justify a conclusion that there was fraudulent intent." Leflore Broadcasting Co. v. FCC, 636 F.2d 454, 462 (1980). The Commission admits that there existed a "direct conflict" between the testimony of the site owner and Liberty principals supporting the conclusion that Liberty had intentionally misrepresented the availability of a site. Liberty Productions, FCC 01-129, 66. The ALJ had before him the deposition testimony of the site's owner who testified both that she never intended to lease the site to Liberty, and that any applicant interested in the site would have had to sign a written lease. He also had heard, in person, the testimony of the very Liberty principals he found not to have been credible. Moreover, the site owners' testimonial evidence was supported by what the Commission again termed "admittedly troublesome" documentary evidence. Id., 71. The Commission stated that "[i]t is somewhat problematic that [the site owner], having just signed a lease providing for up-front payments before the license was awarded, would have been willing to consider leasing [to the Liberty principal] a portion of her property for the same purpose without requesting a similar monetary commitment." Id. In light of the evidence available to the ALJ and the conclusions drawn therefrom, and the Commission's recognition of these factors, it is uncertain what additional quantum of evidence would have been necessary to prove intentional deceit in this or any case.
Finally, when reviewing the ALJ's finding of intentional misrepresentation with respect to site certification, the Commission refused to consider whether Liberty exhibited a pattern of misrepresentation. Misrepresentation issues also were raised with regard to three other issues: Liberty's failure to attach a family media interest certification to its original short-form application; its erroneous claim of a new entrant bidding credit; and its failure to disclose various ownership relationships. While intentional misrepresentation may not have been found with respect to each of these factually inaccurate statements, the Commission should have assessed whether these inaccurate statements-in conjunction with the findings of the ALJ regarding intent to deceive on the site certification issue-raised a substantial question as to whether a pattern of misrepresentation existed.
IV. ORION WILL BE IRREPARABLY HARMED IF A STAY IS NOT GRANTED IN THIS CASE
"The basis for injunctive relief…has always been irreparable harm and inadequacy of legal remedies." Sampson v. Murray, 415 U.S. 61, 88 (1974). Courts have consistently found that denial of a stay will result in irreparable harm if it leads to the loss of an ongoing business. Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977); Wisconsin Gas Company v. Federal Energy Regulatory Commission, 758 F.2d 669, 673 (D.C. Cir.1985). In this instance, failure to grant a stay will result in the complete loss of the Lee family's broadcast business. Zebulon Lee had run station WSKY-AM in Asheville, North Carolina for 46 years, during which time he had become a well-recognized member of the broadcast establishment of western North Carolina. Relatives of Zebulon Lee played integral roles in the operation of WSKY-AM, and these same family members have also assisted in running the Biltmore Forest station. This case is especially troublesome since the Lees divested station WSKY-AM only as a result of a condition placed on the grant of the Biltmore Forest application. Under these circumstances, denying the stay will result in irreparable harm to the Lees by denying them the opportunity to continue operating their only remaining station as an ongoing business.
V. LIBERTY'S ECONOMIC LOSS DOES NOT JUSTIFY DENYING A STAY
As noted by the majority, Liberty stands to incur substantial interest charges should the stay be granted. These charges, Liberty claims, will remain unpaid until it receives advertising revenue. Courts, however, have long held that economic loss, in and of itself, does not constitute irreparable harm unless it threatens the very existence of an ongoing business. Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 559 F.2d at 843; Wisconsin Gas Company v. Federal Energy Regulatory Commission, 758 F.2d at 673. There is no indication that incurring these interest charges would threaten the very existence of Liberty, or that the loss could not be recoverable in the future. Iowa Utilities Board et al v. Federal Communications Commission, 109 F.3d at 425 (Revenues and customers lost to competition which can be regained through competition are recoverable). Indeed, given the financial backing of Cumulus Broadcasting, Inc., it is unlikely that any loss due to lack of advertising revenues during the stay period will threaten the existence of Liberty's ongoing business. However, grant of the stay will result in the complete loss of the Lee family's broadcast business. In light of these unique facts, it seems reasonable to stay the expiration of interim operating status until the Commission determination is final.
VI. THE PUBLIC INTEREST FAVORS GRANTING A STAY IN THIS INSTANCE
The public interest will be served by granting a stay in this limited instance. Those that "played by the rules" when comparative hearings were the order of the day should not be unduly harmed simply because the Commission decided to resolve such cases under a system of competitive bidding. In particular, Orion acted in reliance upon specific Commission dictates.
I do not believe that expediting the selection of a licensee for Biltmore Forest provides a sufficient public interest justification for denying a stay. Rather, by ensuring that Orion is not unduly harmed, the Commission will better preserve the integrity of the competitive bidding system.
I find it problematic that the Commission revisited an ALJ's finding to disqualify an applicant on character issues when a previous Commission had already affirmed the ALJ's basic decision that no site was available. It also is troubling that the Commission performed a new review of the ALJ's character findings when the case was remanded to the Commission on issues not involving our character policy. Because of these irregularities, as well as the manner in which the Commission reviewed the ALJ's findings, I believe there exists a substantial likelihood that Orion will succeed on the merits of this case. I further believe that the Lee family will suffer irreparable harm if a stay is not granted, particularly because the Lees divested their only other station in order to own and operate the station at issue here. Moreover, the grant of a stay will cause Liberty only a temporary economic loss. Consequently, a balancing of the equities clearly favors Orion over Liberty, and I believe granting the stay would be appropriate.