EchoStar Communications Corporation,
Federal Communications Commission and
Comcast Corporation, et al.,
On Petition for Review of an Order of the
Federal Communications Commission
Pantelis Michalopoulos argued the cause for petitioner. With him on the briefs were Charles G. Cole, Philip L. Malet and Rhonda M. Bolton.
Louis E. Peraertz, Special Counsel, Federal Communications Commission, argued the cause for respondent. With him on the brief were Jane E. Mago, General Counsel, and Daniel M. Armstrong, Associate General Counsel. Catherine G. O'Sullivan and Robert J. Wiggers, Attorneys, U.S. Department of Justice, entered appearances.
David E. Mills argued the cause for intervenors. With him on the brief was David J. Wittenstein.
Before: Ginsburg, Chief Judge, Edwards and Sentelle, Circuit Judges.
Opinion for the court filed by Chief Judge Ginsburg.
Ginsburg, Chief Judge: EchoStar petitions for review of an order of the Federal Communications Commission dismissing the Company's program access complaint against Comcast Corporation and two of its affiliates, and denying its motion to compel Comcast to produce certain documents. Comcast has intervened and filed a brief in support of the Commission. Because we conclude that the Commission's order is reasonable and supported by substantial evidence, we deny review.
nationwide provider of direct broadcast satellite (DBS) television service,
competes in the
Section 548(b) prohibits a "satellite cable programming vendor" affiliated with a cable operator from engaging in:
unfair methods of competition or unfair or deceptive acts or practices, the purpose or effect of which is to hinder significantly or to prevent any multichannel video programing distributor [MVPD] from providing satellite cable programming....
47 U.S.C. § 548(b). Section 548(c)(2) instructs the Commission to promulgate regulations to prevent a cable operator from "unduly or improperly influencing" the sales decisions of its affiliated satellite cable programming vendor, and to prohibit an affiliated satellite cable programming vendor from discriminating in the prices, terms, and conditions of sale or delivery of satellite cable programming, which the Commission has done, see 47 C.F.R. § 76.1002.
Services Bureau denied EchoStar's complaint in its entirety. The Bureau held first that EchoStar's claims
under the regulations -- based upon the Comcast affiliates' refusal to sell it
SportsNet, and upon Comcast's unduly influencing its affiliates -- failed
because SportsNet, being terrestrially distributed, is not "satellite cable
Communications Corp. v. Comcast Corp., 14 F.C.C. Rcd. 2089, p 21 (CSB 1999)
(Bureau Order). Next the Bureau -- assuming, as EchoStar had argued in its
complaint, that the Commission could prohibit an attempt to evade the regulations
-- concluded that Comcast had not switched SportsNet from satellite to
terrestrial delivery with a purpose of evasion.
EchoStar then applied to the Commission for review, which was denied. See In the Matter of DIRECTV, Inc. and EchoStar Communications Corp. v. Comcast Corp., 15 F.C.C. Rcd. 22802, p 2 (2000) (Commission Order). With respect to Comcast's alleged evasion, the Commission
acknowledge[d] that there may be some circumstances where moving programming from satellite to terrestrial delivery could be cognizable under [47 U.S.C. § 548(b)] as an unfair method of competition or deceptive practice if it precluded competitive MVPDs from providing satellite cable programming.
On review in this
court EchoStar challenges the Commission's holding that Comcast did not violate
§ 548(b) by moving programming from satellite to terrestrial delivery in order
to evade the program access requirements of § 548(c), and the denial of its
motion for discovery. We review the
decision of the Commission under the Administrative Procedure Act, 5 U.S.C. § 706,
to determine whether it is "arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law."
We will uphold the decision if the Commission made factual findings
supported by substantial evidence, considered the relevant factors, and
"articulate[d] a rational connection between the facts found and the
choice made." Motor Vehicles Ass'n
v. State Farm Mut. Auto Ins. Co., 463
A. Dismissal of the Complaint
EchoStar raises three challenges to the Commission's order dismissing its complaint: The Commission's decision is not supported by substantial evidence; the Commission disregarded certain evidence of evasion; and the Commission failed adequately to explain its decision.
1. Substantial evidence
With regard to
the substantiality of the evidence underlying the Commission's decision,
EchoStar does not dispute that the affidavit of Sam Schroeder, an executive of
the Comcast affiliate that owns SportsNet, supports the Commission's finding
that terrestrial delivery costs Comcast significantly less money than would
satellite delivery. Instead, EchoStar
claims that Schroeder's declaration is not substantial evidence because it is
"unsupported and untested" and hearsay, for which proposition it
relies principally upon Consolidated Edison Co. v. NLRB, 305
inexplicably fails to address these arguments in its brief, but Comcast comes
to the Commission's rescue. First,
Comcast argues that the Commission could rely upon Schroeder's affidavit
because it was given under oath, the affiant had personal knowledge of the
facts he recounts, EchoStar does not challenge his cost estimates, and there is
no requirement that an affidavit be corroborated. Second, Comcast argues that it is
well-settled not only that hearsay can be considered by an administrative
agency but that it can constitute substantial evidence. See
We have to agree
with Comcast. There is no support for
EchoStar's claims that uncorroborated and untested testimony and hearsay
testimony cannot constitute substantial evidence. Although the Court in Consolidated Edison did
say in dicta that "[m]ere uncorroborated hearsay or rumor does not
constitute substantial evidence," 305 U.S. at 230, the Court has long
since made clear that this statement was "not a blanket rejection by the
Court of administrative reliance on hearsay irrespective of reliability and
probative value," Richardson, 402 U.S. at 407; hence in that case the Court concluded that
unsworn doctors' examination reports, contradicted by direct medical testimony,
constituted substantial evidence upon which an agency could deny disability
insurance benefits under the Social Security Act.
The propriety of the Commission's reliance upon Schroeder's affidavit is particularly clear. First, the affidavit, although technically hearsay, that is, an out of court statement offered for the truth of the matter asserted, was made under oath. Second, the facts contained therein were undisputed. EchoStar submitted no contradictory evidence -- indeed, no evidence whatsoever except two magazine articles. See Mot. to Compel at 5-6. If the Commission could not rely upon the uncontested, sworn affidavit of a witness speaking from personal knowledge, then one would be hard-pressed to under-stand why a district court may, upon the basis of a sworn declaration, grant summary judgment under Federal Rule of Civil Procedure 56.
2. "Evidence" the Commission did not address
the Commission ignored evidence that Comcast intended to evade the requirements
of § 548(c). In this regard, EchoStar
claims to have "proffered" the following evidence: (1) an admission by an unnamed Comcast
representative made at a
argues that it was under no obligation to address the Vanity Fair article in
its order because "[t]here is nothing in Mr. Robert's [sic] alleged quotes
[sic] to suggest that Comcast did anything unfair or to cast doubt on the claim
of significant cost advantages from terrestrial delivery." Comcast agrees with that assessment and goes
on to point out that there is no record evidence of an admission made at a
standard that EchoStar suggests, we cannot fault the Commission for having ignored
any "significant record evidence."
First, EchoStar points to no record evidence of a
Second, the statement attributed to Roberts in Vanity Fair lacks any probative value. Consider:
The question now is whether Roberts can capitalize on an apparent loophole in the 1996 Telecommunications Act in order to lock up the Philly area's sports programming. "We don't like to use the words 'corner the market,' because the government watches our behavior," Roberts says with a laugh. "Let's just say we've been able to do things before they're in vogue."
The New Establishment: Brian Roberts, Vanity Fair, Oct. 1997, at 166. Even if we assume the accuracy of the quotation, it says nothing about whether Comcast moved from satellite to terrestrial delivery in order to evade the program access requirements of § 548(c). At most, Roberts concedes that Comcast is taking advantage of SportsNet's not being covered by § 548(c) because it is delivered terrestrially.
In its reply brief EchoStar argues for the first time before this court that the Commission's finding that Comcast did not intend to evade the requirements of § 548(c) is not supported by substantial evidence because the Commission failed adequately to address (1) a letter from Comcast in which it stated that SportsNet would not be distributed "on any satellite delivered service in the Philadelphia market"; (2) Schroeder's statement that Comcast refused to sell SportsNet to EchoStar in order to enhance its value to other purchasers; and (3) EchoStar's offer to "cover a share of the uplink costs" of delivering SportsNet via satellite. In the "Statement of Facts" in its opening brief EchoStar noted that it had presented the evidence to the Bureau, but it nowhere in that brief faulted the Commission for failing adequately to address this evidence. Because the arguments to that effect were raised for the first time in EchoStar's reply brief, they are not properly before the court. McBride v. Merrell Dow Pharm., Inc., 800 F.2d 1208, 1210-11 (D.C. Cir. 1986).
3. Failure to explain
that the Commission's decision should be set aside as arbitrary and capricious
because the Commission failed in two respects to "articulate its reasons
in a clear and understandable manner."
First, the Commission stated, "we agree with the Bureau that the
facts alleged are not sufficient to constitute" a violation of § 548(b),
even though it is clear that the Commission's decision relied upon facts found
by the Bureau. See Commission Order at
WW 13-14. Second, EchoStar questions the
weight the Commission placed upon the Bureau's finding that SportsNet "was
not a service that was moved from satellite to terrestrial distribution, but
was in fact a new service."
In response, the Commission confirms that its determination that Comcast did not engage in unfair methods of competition or unfair or deceptive acts or practices involved a "factual inquiry." The Commission gives no explanation, however, for the statement in its order that the "facts alleged" are insufficient to state a claim. With respect to EchoStar's second argument, the Commission fails to explain why choosing terrestrial delivery from the outset with an intent to evade would not give rise to a violation of § 548(b). Comcast does not respond at all to EchoStar's arguments.
is correct that the Commission said it was evaluating the § 548(b) claim based
upon the "facts alleged" when clearly it relied upon the findings
made by the Bureau, the misstatement is immaterial. Both the Commission's reasoning and its
actual holding "may reasonably be discerned." See Bowman Transp., Inc. v. Arkansas-Best
Freight System, Inc., 419
EchoStar's Motion to Compel Production of Documents was long on reasons the evidence before the Bureau was already sufficient, and short on reasons discovery was necessary, but the essence of its rationale for discovery was the observation that: "[C]orroborative evidence about the unfairness of Comcast's conduct, as well as Comcast's motives ... must necessarily lie in the exclusive custody of Comcast." To the extent the Bureau was responsive to EchoStar's contention, its explanation was terse: "EchoStar has not persuaded us that discovery is necessary or that the record compiled herein is insufficient." Bureau Order p 31. Thus, the Commission's sub silentio denial of EchoStar's Motion to Compel must stand or fall upon the Bureau's statement that the record was already sufficient to decide the case.
Without specifically attacking anything actually said in the Bureau's order, EchoStar argues that the Agency's decision to deny it discovery was arbitrary and capricious, denied it due process of law, and violated EchoStar's right under § 556(d) of the APA to submit rebuttal evidence. EchoStar does not appear to challenge the Commission's general rule that discovery is available in program access cases only "on a case-by-case basis as deemed necessary by the Commission staff reviewing the complaint." In the Matter of Implementation of Sections 12 and 19 of the Cable Television Consumer Protection and Competition Act of 1992, First Report & Order, 8 F.C.C. Rcd. 3359, p 75 (1993). Rather, EchoStar seems to contend that denying it discovery in this case was fundamentally unfair because "the Commission decided the unfair practices claim based solely on Comcast's own assertions about its motives" and "[t]he only way for EchoStar to meet its burden of proof regarding these motives was for the FCC to allow discovery."
In response, the Commission invokes its general rule and faults EchoStar's Motion to Compel upon a number of grounds not even arguably relied upon by the Bureau. The Commission also argues, however, that EchoStar failed to meet its burden of showing why discovery into Comcast's motive for distributing SportsNet terrestrially was necessary in light of the evidence before the Bureau that SportsNet was a new service and that terrestrial delivery was less expensive than satellite delivery, and EchoStar's failure to submit contradictory evidence. Comcast adds the observation that agency decisions regarding discovery are entitled to "extreme deference." Hi-Tech Furnace Sys., Inc. v. FCC, 224 F.3d 781, 789 (D.C. Cir. 2000).
Under a less
deferential standard of review the cryptic nature of the Bureau's decision
might make this a close case. According
the Agency "extreme deference," however, its "path may
reasonably be discerned." Bowman
Although requiring a party to present evidence indicating that discovery is necessary might in some circumstances place that party in a difficult situation, that is not a concern in the circumstances of this case. EchoStar was free to put forward evidence about distribution services rebutting, if it could, Schroeder's assertions about the cost of terrestrial versus satellite delivery; and it could surely have submitted an affidavit supporting its claim to have offered to pay for the uplink and to have witnessed the statement allegedly made by Comcast at a July 23 meeting.
In support of its
suggestion that the denial of discovery in this case violated its right to due
process, EchoStar cites only McClelland v. Andrus, 606 F.2d 1278 (D.C. Cir.
1979). On the facts of that case we held
that the agency's refusal to allow discovery of a particular document
"could" violate due process.
claims in a sentence that the Agency's decision is contrary to § 556(d) of the
APA, which provides that "[a] party is entitled to ... submit rebuttal
evidence." 5 U.S.C. § 556(d). Neither logic nor authority supports EchoStar's
claim that the statute imposes upon an agency the obligation to order discovery
upon demand so that a party may seek rebuttal evidence to submit. Nor are we at liberty so to embroider the
procedures of the APA. See Vermont
Yankee Nuclear Power Co. v. NRDC, 435
Because the decision of the Commission is reasonable and is supported by substantial evidence, EchoStar's petition for review is