FOR THE
Argued
No. 01-1032
EchoStar
Communications Corporation,
Petitioner
v.
Federal
Communications Commission and
Respondents
Comcast Corporation,
et al.,
Intervenors
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.
I. Background
EchoStar, a
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.
The Cable
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
programming." EchoStar
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.
II. Analysis
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
The Commission
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
EchoStar argues
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
The Commission
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
Applying the
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
EchoStar contends
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.
Although EchoStar
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
B. Discovery
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
Transp., 419
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.
Finally, EchoStar
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
III. Conclusion
Because the
decision of the Commission is reasonable and is supported by substantial
evidence, EchoStar's petition for review is
Denied.