Opposition — Mount Wilson F. M. Broadcasters, Inc. v. Fox

ext:

IN THE | uy 24

Supreme Court of the United ‘

October Term, 1976

No. 76-1652

MouNT WILSON F.M. BROADCASTERS, INC.,

Petitioner,

vs.

ROBERT L. Fox and IRA LAUFER,

Respondents.

On Petition for a Writ of Certiorari to the Court of Appeal of

the State of California, Second Appellate District, Division

Two.

BRIEF FOR RESPONDENTS IN OPPOSITION.

ALFRED S. GAINSLEY,

E..is J. Horvitz LAW CORPORATION,

E.uis J. Horvitz,

Maec J. Poster,

15760 Ventura Boulevard, 7th Floor,

Encino, Calif. 91436,

(213) 995-0800,

Attorneys for Respondents

Robert L. Fox and Ira Laufer.

June 23, 1977

Parker & Son, Inc., Law Printers, Los Angeles. Phone 724-6622

The State Court Judgment Rests on the Adequate

Non-Federal Ground That the Illegality of the

Contract Under the “Golden West” a

Was Not Timely Raised .....

No Federal Question Is Presented Because the

Only Evidence Relied on by Petitioner to

Support Its Claim of Illegality Is Outside the

Community, Has No Applcation to Stations

CEE

Appendix. United States of America Federal

Letter to KVEN Broadcasting Corporation,

Radio Station KVEN and KHAY (FM), Dated

RS GUD cccenceercenesenessmannscesssensernenmnensensee

TABLE OF AUTHORITIES CITED

Cases Page

Sales Practices (1976) 59 F.C.C.2d 894 _.......

Edelman v. California (1953) 344 U.S. 357, 97 L.

> See, Oe ND nen

Everly Enterprises v. Altman (1960) 54 Cal.2d

761, 8 Cal.Rptr. 455, 356 P.2d 199 00.

First Illinois Cable TV, Inc. (1973) 43 F.C.C.2d

SED 9 ccsemepeneennnieenemimenineiiie

Cobden West Beoudceners (1969) 16 F.C.C.2d 918

ee a Lee L222 & @& &

Kahn v. Wilson (1898) 120 Cal. 643, 53 Pac. 24

ee ee ee

ge eee

New Haven Inclusion Cases (1970) 399 U.S. 392,

26 L.Ed.2d 691, 90 S.Ct. 2054 00.

Shepherd v. United States (1933) 290 U.S. 96, 78

eS" yy eee

Stembridge v. Georgia (1952) 343 U.S. 541, 96

L.Ed. 1130, 72 S.Ct. 834 eee 3,

Sudbrink a Inc. (1973) 42 F.C.C.2d

ee Reniiieienmeuemengmeneenitin

Trafton vy. Youngblood (1968) 69 Cal.24 17, 69

I

Statute

United Swates Code, Title 28, Sec. 1257(3) ......

Supreme Court of the United States

October Term, 1976

No. 76-1652

Mount Witson F.M. BroapcasTers, INC.,

Petitioner,

vs.

Ropert L. Fox and Ira LAUFER,

Respondents.

On Petition for a Writ of Certiorari to the Court of Appeal of

the State of California, Second Appellate District, Division

Two.

Respondents Robert L. Fox and Ira Laufer respect-

fully submit that the Petition for Writ of Certiorari

of Petitioner Mount Wilson F.M. Broadcasters, Inc.,

West principle was improperly raised for the first time

—2—

principle, which prohibits cross-interests in radio stations

serving the same community, has no application where

the radio stations serve separate communities and mar-

kets 80 miles apart.

Jurisdiction.

Petitioner may not invoke the jurisdiction of this

Court under 28 U.S.C. §1257(3) because the judgment

of the state court rests on an adequate non-federal

ground. Under state law, Petitioner was precluded from

questioning the legality of the sales representation con-

tract for the first time in its reply brief on appeal.

Moreover, the specious issue was based on “evidence”

never offered in the trial court.

Questions Presented.

Petitioner first raised the issue of illegality of the

sales representation contract under the Golden West

principle in its reply brief in the California Court

of Appeal based on evidence outside the trial record.

The California Supreme Court denied a hearing on

the appeal without opinion, presumably on the adequate

non-federal ground that state law requires such issues

to be raised and litigated in the trial court. Is Petitioner

precluded from seeking jurisdiction of this Court to

consider this untimely and unlitigated issue?

The Golden West principle prohibits cross-interests

in radio stations serving the same community. Does

a cross-interest in radio stations which serve separate

communities and markets 80 miles apart violate the

Golden West principle?

oafh=e

ARGUMENT.

I

The State Court Judgment Rests on the Adequate Non-

Federal Ground That the Ilegality of the Contract

Under the “Golden West” Principle Was Not

Timely Raised.

Petitioner never questioned the legality of the sales

representation contract under the Golden West principle

until its reply brief in the California Court of Appeal.

(Petition, p. 4.) The Court rejected the belated

contention. (Appendix C to Petition, p. 56a.) Peti-

tioner again raised the issue on application for hearing

before the California Supreme Court. (Appendix B

to Petition, pp. 43a-Sla.) That Court denied the ap-

Court denied a hearing presumably on the adequate

non-federal ground that under state law such issues

must be raised and litigated in the trial court (Everly

Enterprises v. Altman (1960) 54 Cal.2d 761, 765,

8 Cal.Rptr. 455, 356 P.2d 199) and may not be

raised for the first time in a reply brief on appeal.

(Kahn v. Wilson (1898) 120 Cal. 643, 644, 53 Pac.

24.)

To merit consideration by this Court, federal ques-

tions must be seasonably raised in accordance with

requirements of State law. (Edelman v. California

(1953) 344 U.S. 357, 358, 97 L.Ed. 387, 73 S.Ct.

293.) Petitioner failed to seasonably raise the issue

of the legality of the sales representation contract

in accordance with requirements of California law.

Stembridge v. Georgia (1952) 343 US. 541, 96

L.Ed. 1130, 72 S.Ct. 834, is exactly in point. In

that case, the petitioner raised a federal question for

ro

the first time in an application for rehearing in the

State intermediate appellate court. The court considered

the federal question but denied the application for

rehearing. The state’s highest court denied a hearing

without opinion on the federal question. The United

States Supreme Court dismissed the case on grounds

that the Petition for Certiorari was improvidently grant-

ed. The Court concluded that, because the denial of

a hearing on the federal question by the state’s highest

court could have rested on the adequate state ground

of failure to timely raise the federal question in the

trial court, the Supreme Court would decline jurisdiction

to review the judgment. The fact that the state inter-

mediate appellate court considered the federal question,

the Court explained (343 U.S. at 547-548),

“does not, in our view, change the posture of —

this case—it does not remove the strong possibility,

in light of Georgia law, that the Supreme Court

of Georgia might have rested its order on a non-

federal ground. We are without jurisdiction when

the question of the existence of an adequate state

ground is debatable.”

In the instant case, as in Stembridge, the federal

question was never raised in the trial court and was

untimely raised in the intermediate state appellate court.

Although the intermediate appellate court considered

the federal question, the state’s highest court rejected

an application for hearing on the federal question with-

Certiorari should be denied on the ground that the

State court judgment rests on an adequate non-federal

ground.

onlin

II

No Federal Question Is Presented Because the Only

Evidence Relied on by Petitioner to Support Its

Claim of Ilegality Is Outside the Record.

Petitioner bases its claim that the sales representation

contract violated the Golden West principle on the

assertion that the broadcast signal contours of the

two radio stations partially overlapped. (Petition, pp.

8-9.) Not a shred of evidence was introduced at trial

to support this assertion.

The source and accuracy of the chart of “coverage

contours”, referred to in the Petition (Appendix F

to Petition, pp. 63a-65a) is unknown. The chart was

not in evidence in the trial court, was not in evidence

before the California Court of Appeal, and was not

in evidence before the California Supreme Court. Under

well-settled rules of California procedure, appeals must

be confined to the facts in the trial record. (Loving

& Evans v. Blick (1949) 33 Cal.2d 603, 613-615,

204 P.2d 23.) And under United States Supreme Court

rules, evidence outside the record will not be considered.

(New Haven Inclusion Cases (1970) 399 U.S. 392,

450, fn. 66, 26 L.Ed.2d 691, 90 S.Ct. 2054.)’

‘In its reply brief in the California Court of Appeal, Petitioner

cited an exhibit which was admitted at trial solely for the

of establishing the continuing contractual relationshi

Petitioner and Respondents. (Exhibit 8, C.T. 617-

618, R.T. 148-149.) Petitioner could not, then or now, rely

on the exhibit as proof that the broadcast signal contours

of the radio stations overlapped. The exhibit, mere advertising

was never offered to show, or authenticated as show-

broadcast signal contour of Petitioner's radio station,

G6 © page © dew G exten & Oe nm

station. Both California and Federal law rejects the use of

evidence, admitted at trial to prove one fact, to establish on

appeal an entirely different fact. As Mr. Justice Cardozo ex-

(This footnote is continued on next page)

sotlen

Certiorari should be denied because nothing in the

record supports Petitioner’s claim that this case presents

a federal question.

Ill

The “Golden West” Principle, Which Prohibits Cross-

Interests in Stations Serving the Same Community,

Has No Application to Stations Serving Separate

Communities and Markets 80 Miles Apart.

Even if the California courts considered evidence

outside the trial record, which they did not, and even

if Petitioner timely raised the federal question of illegal-

ity of the contract, which it did not, nevertheless it

is clear that the contract between Petitioner and Re-

spondents does not violate the principles stated by

the Federal Communications Commission (“FCC”) in

Golden West Broadcasters (1969) 16 F.C.C.2d 918.

Golden West involved a contract for sales representa-

tion of one radio station by the owner of another

radio station in the same community. The FCC conclud-

og in Shepherd v. United States (1933) 290 US. 9%6,

03, 78 L.Ed. 196, 54 S.Ct. 22:

“A trial becomes unfair if testimony thus accepted [for

one SpE may be used in an appellate court as though

admitt for a different purpose, unavowed and unsuspected

The California Supreme Court similarly refuses to consider

evidence, offered solely to prove one fact, as proof of another

fact. Trafton v. Youngblood (1968) 69 Cal.2d 17, 32, 69

Cal.Rptr. 568, 442 P.2d 648, explains (emphasis in original):

“As we said .. ., ‘It is frequently the case that evidence

which is admissible to establish one issue may tend to

establish another... . If the other issue that the evidence

may tend to establish is not before the court the evidence

must be limited to the actual issue. The fact of its introduc-

tion cannot be used to establish an issue that ~

have not made in their pleadings. The Court not

be authorized to consider it as establishing an issue that

was not before it for trial.”

endiine

ed that such a contract could lessen competition and

would therefore violate the FCC’s policy of promoting

competition between radio stations. The FCC has never

declared the Golden West principle applicable where

stations are licensed for widely separated communities,

much less where, as here, the stations are 80 miles

apart and service entirely different markets. The de-

cisions relied on by Petitioner, Sudbrink Broadcasting,

Inc, (1973) 42 F.C.C.2d 271, and First Hlinois Cable

TV, Inc. (1973) 43 F.C.C.2d 1125, both involved

Stations in adjoining cities providing primary service

to the same market.

The FCC has refused to harden the Golden West

principle into an unbending rule. The FCC considers

the circumstances of each case. In its recent decision,

Combination Advertising Rates and Other Joint Sales

Practices (1976) 59 F.C.C.2d 894 (Appendix A to

the Petition, pp. 32a-42a), the FCC states (at para-

graph 16):

“(W]e do not believe that contours or any

suggested substitute would be suitable for repre-

senting the areas served by a station in view

of the manner in which broadcast time is sold.

Accordingly, we conclude that no rule will be

adopted and that contours will not be used in

regard to the policies set out in the Golden West

case or the extension thereof.”

Thus, even with reference to evidence outside the

record which purports to show a partial overlap of

broadcast signal contours, Petitioner fails to show a

violation of the Golden West principle. The two radio

stations, KVEN in Ventura, and KBCA in Los Angeles,

- =

do not serve the same city, or even nearby cities,

or the same area or market, nor is there a substantial

overlap of broadcast signal contours.

In addition, Petitioner advised the FCC of the exist-

ence of this litigation and the sale representation con-

tract at the time of the application for renewal of

KVEN’s license. A letter from the FCC to KVEN

shows that the FCC considered this lawsuit in deter-

mining to renew KVEN’s license. (Appendix A to

this Brief in Opposition.) The FCC found nothing

improper in this aspect of the sales representation con-

tract. Presumably the FCC is aware of its own policies,

rules and regulations, and if it found the contract

improper it would have said so.

In light of the FCC’s full knowledge of the sales

representation contract and the patent validity of the

contract under the Golden West principle, Petitioner's

belated attempt io question the propriety of the contract

under FCC rules is groundless, wasteful, and should

be rejected.

Conclusion.

For the foregoing reasons it is respectfully submitted

that this Petition for a Writ of Certiorari should be

denied.

Respectfully submitted,

ALFRED S. GAINSLEY,

Exvuis J. Horvitz LAW CORPORATION,

E.uis J. Horvitz,

Marc J. Poster,

Attorneys for Respondents

Robert L. Fox and Ira Laufer.

June 23, 1977

APPENDIX.

UNITED STATES OF AMERICA

FEDERAL COMMUNICATIONS COMMISSION

Washington, D.C.

I, Vincent J. Mullins, hereby certify that the attached

is a true and correct copy of the following document

on file in this Commission, and that I am official

custodian of the same:

A letter to KVEN Broadcasting Corporation, Ven-

tura, California from the Commission’s Broadcast

Bureau dated August 8, 1975.

IN WITNESS WHEREOF, I have hereunto set

my hand, and caused the seal of the Federal

Communications Commission to be affixed, this

fifth day of November, 1976.

/s/ Vincent J. Mullins

Secretary

[Seal |

~—

FEDERAL COMMUNICATIONS COMMISSION

WASHINGTON, D.C. 20554

August 8, 1975

CERTIFIED AIR MAIL—RETURN RECEIPT RE-

QUESTED

KVEN Broadcasting Corporation

Radio Station KVEN and KHAY (FM)

P.O. Box 699

Ventura, California 93001

Attention: Robert L. Fox, President

Gentlemen:

This is in reference to your applications for renewal

of license of Stations KVZN (BR-2069) and KHAY-

FM (BRH-1425), Ventura, California.

As you are aware, information concerning your renewal

has been brought to the Commission’s attention by

Mount Wilson FM Broadcasters, Inc. (licensee of

KBCA, Los Angeles, California). Mount Wilson al-

leges, in substance, that the principals of KVEN Broad-

casting Corporation (Messrs. Fox and Laufer) con-

cealed from the Commission certain facts pertaining

to a relationship between themselves and KPRO, Inc.

(licensee of Radio Station KPRO, Riverside, Califor-

nia). More specifically, Mount Wilson alleges that:

(1) Fox and Laufer acquired an ownership interest

in KPRO prior to September 1, 1970 and KVEN

failed to notify the Commission within 30 days as

required by the Commission’s Rules; (2) Fox and

Laufer became vice presidents of KPRO, Inc. on March

15, 1971 and KVEN concealed the fact from the

Commission by failing to report it in its 1971 renewal

application or in subsequent ownership reports; and,

—

(3) Fox and Laufer became stockholders of KPRO,

Inc, between July 19 and October 12, 1972 and KVEN

did not notify the Commission within 30 days as re-

quired.

We have carefully reviewed the Commission’s records

for KVEN and KPRO in light of Mount Wilson's allega-

tions and your response to those allegations. The results

of that review and our conclusions are set out below.

Mount Wilson alleges that on or about September

1, 1970 Robert Fox informed Saul Levine (President

of Mount Wilson FM Broadcasters, Inc.) that he (Fox)

and Laufer had acquired an ownership interest

in KPRO, Inc. and that Fox repeated the statement

more “recently” to Saul Levine's attorney. It is further

alleged, that a letter signed by Robert Fox, dated

November 20, 1970, is contained in the files of Station

KPRO which states, in part, “Ira Laufer and I (Fox)

have taken over as chief operating officers of KPRO

effective October 1, 1970. Furthermore, we have taken

an ownership interest in the station. . .” In reply,

you complain that the Mount Wilson allegations are

an attempt to harass KVEN because of pending civil

litigation in the California State Courts between Mount

Wilson and Fox and Laufer. You state KPRO and

Laufer entered into an employment agreement Septem-

ber 1, 1970 but that the contract did not provide

for stock ownership. You further state there was an

oral understanding that KPRO, Inc. was to be re-

incorporated and that on completion of the re-incorpora-

tion Fox and Laufer would be given the right to

purchase 10% (5% each) of the common stock of

KPRO, Inc. In addition, you explain that neither Fox

nor Laufer are lawyers and the use of the term “owner-

ship interest” by Fox was based on his understanding

_

of what his interest would eventually be and not on

any legal right he actually had.

The record shows no provision in the Fox-Laufer non-

exclusive employment agreements of September 1, 1970

for either a percentage of the profits and/or a sharing

of the losses. Thus, these agreements were not required

(by Section 1.613 of the rules) to be filed with the

Commission. The record also indicates the oral “under-

standing” was set out in writing September 21, 1970

in the form of a “deal points” summary from KPRO’s

legal counsel to its principals. The summary shows

that Fox and Laufer would be permitted to purchase

10% of the common stock of “the company.” However,

the sale was contingent on the re-incorporation of

KPRO, the resolution of certain legal and tax questions,

and the concurrence of KPRO’s principals. When con-

sidered in full light of the questions involved and

the two years it took to draw forth a final agreement

from the understanding, it does not appear that Fox

and Laufer acquired, prior to July 19, 1972, any

interest in KPRO which KVEN was required to report

to the Commission. In addition, The Superior Court

of the State of California for the City of Los Angeles

rendered a judgment, April 4, 1975, which is relevant

to this issue. Specifically, in the matter of Robert

L. Fox and Ira Laufer v. Mount Wilson F.M. Broad-

casters, Inc., et al., No. C27123 the court held,

in pertinent part:

Under the terms of the employment agreement

between Plaintiffs (Fox and Laufer) and radio

station KPRO, entered into in 1970, plaintiffs

did not acquire either an ownership interest or

stock position in said radio station KPRO. .. .

a

--5—

Plaintiffs did not acquire stock or own stock in

radio station KPRO, Riverside, until September

27, 1972, and plaintiffs did not enter into an

agreement to purchase stock in KPRO until July

19, 1972.

Mount Wilson also alleges that Fox and Laufer became

vice presidents of KPRO, Inc. March 15, 1971, and

that KVEN concealed this fact from the Commission

by failing to report it in its 1971 renewal application

filed September 1, 1971 or in ownership reports filed

October 6, 1971 and February |, 1973. The record

shows that Fox and Laufer were elected on March

15, 1971 as “part time” vice presidents of KPRO,

Inc., in charge of sales and station operation, respective-

ly. The position of “part time” vice president did not

confer on either Fox or Laufer any control of KPRO,

Inc. and thus, did not constitute a change which KVEN,

Inc. was required to report to the Commission.

Mount Wilson further alleges that Commission records

for KPRO, filed October 16, 1972 show Fox and

Laufer as 10% owners of KPRO’s common stock,

but these records for KVEN also indicate that the

first time KVEN informed the Commission of the Fox-

Laufer stock holdings in KPRO, Inc. was by ownership

report filed January 4, 1974. In addition Mount Wilson

alleges ownership reports for KVEN filed October 6,

1971 and February 1, 1973 and the 1971 renewal

application specifically denied any broadcast interests

(except KVEN) for Fox and Laufer. Therefore, it

is averred, the information was concealed.

The record shows that KPRO, Inc. and Fox and Laufer

consummated an agreement July 19, 1972 which, in

substance, provided for the future purchase of KPRO

alien

stock by Fox and Laufer. The agreement was expressly

conditioned on the prior approval of the sale of the

securities by the California State Commusioner of Cor-

porations. An ownership report filed October 16, 1972

for KPRO shows the actual transfer of the stock oc-

curred September 27, 1972. Section 1.615(a) of the

Commission’s Rules requires each licensee of a commer-

cial broadcast station to file an ownership report when

the application for renewal of station license is required

to be filed. The name, stockholdings of officers, direc-

tors and stockholders, among other things, must be

reported. In addition, Section 1.615(c) requires, in

part:

(c) A supplemental Ownership Report ( FCC

Form 323) shall be filed by each licensee or

permittee within 30 days after any change occurs

in the information required by the Ownership Re-

Thus, the agreement of July 19, 1972 and the actual

stock transfer September 27, 1972 were changes which

KVEN was required to report. The fact that the infor-

mation was on file with the Commission (in KPRO’s

license file) does not alleviate KVEN’s duty to comply

fully with the reporting requirements of the rules. In

addition, your failure to report, on the 1971 renewal

application, that Fox and Laufer were officers

KPRO, Inc., demonstrates a iack of prudence. While

not in violation of the strict letter of the rules, neither

does it meet the spirit of the Commission’s Rules.

The Communications Act requires the Commission to

determine, in the case of each application filed with

it, whether the public interest, convenience, and neces-

sity will be served by a grant of that application.

g

ontiia

We believe we can make that determination here with-

out further administrative inquiry. We note particularly

that the required information was available in the Com-

mission’s files through submission by KPRO. However,

your failure to comply with the reporting requirements

of the Commission's rules cannot be condoned. A copy

of this letter will be placed in KVEN’s permanent

record file at the Commission and your strict adherence

to the rules in the future will be expected.