Petition — Faulkner Radio, Inc. v. Federal Communications Commission

Supreme Court brief1981

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Supreme Court, U.S.

nga

S 0 - | 1 6 9 FILED

JAN 13 1981

No.

a “K, JR., CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1980

FAULKNER RADIO, INC.,

Petitioner,

FEDERAL COMMUNICATIONS COMMISSION,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

ROBERT L. HEALD

MARVIN ROSENBERG

EDWARD W. HUMMERS, JR.

FLETCHER, HEALD & HILDRETH

1225 Connecticut Avenue, N.W.

Suite 400

Washington, D.C. 20036

(202) 828-5700

January 1981 Attorneys for Petitioner.

Washington, OC « THIEL PRESS ¢ (202) 638-4521

(2)

QUESTIONS PRESENTED

The decision of the Federal Communications Commis-

sion, affirmed by the court of appeals, presented the

following questions:

(1) Whether the Federal Communications Commission

can deny an application for renewal of a broadcast

station license because the licensee, in accordance with

the provisions of Section 309(d) of the Communications

Act, filed a petition to deny the application for a new

broadcast station, which would be a competitor, on the

ground the petition was filed primarily for the purpose of

delay.

(2) Whether the Federal Communications Commission,

in a license renewal proceeding, may find an applicant has

been guilty of misrepresentation or other conduct on less

than “clear and convincing” evidence* when such a

finding will permanently disqualify it from being a

broadcast licensee.

*One aspect of the issue of whether an administrative agency's

findings must be supported by clear and convincing evidence,

rather than by a mere preponderance of the evidence, when the

agency makes a determination which has the effect of permanently

excluding an individual or corporation from the business regulated

by that agency is currently before this court in Steadman v.

Securities and Exchange Commission, No. 79-1266.

(11)

TABLE OF CONTENTS =a.

EO TIONS PRESENTED 4. os ok ec eee bea ee i

CARE SP AUTORITIES 2 ww. oc. cd devine ii

PARTIES TO PROCEEDING .........ccccccccecccee 1

ee SEMI 6-5 kb ke os oes bs ele ee 2

SURI oo oh ois ce oe 2

CONSTITUTIONAL PROVISIONS, STATUTES

AND REGULATIONS INVOLVED ................ 3

PrAtueees OF THE CAR kk cooks cdc 3

REASONS FOR GRANTING THE WRIT ............. 8

I. The Federal Communications Commission’s

Conclusion Disqualifying A Licensee For

Filing a “Strike’’ Petition Is Contrary To

The Intent Of Congress And The Rulings Of

This Court And Violates Petitioners’ Right

To Petition Protected By The Bill of Rights ........ 8

Il. The Federal Communications Commission

In Failing To Employ The Same Standard

Of Proof, i.e., Clear and Convincing Evi-

dence, In A Renewal Proceeding Involving

Dis qualifying Character Issues, As It Must

In A Revocation Proceeding Acted Contrary

To The Intent Of Congress And Violated

Basic Principles Of Due Process Of Law .......... 15

AIOE Sten ans td deta den ee 23

TABLE OF AUTHORITIES

Cases:

Addington v. Texas, 441 U.S. 418 (1979)........... 20-21

California Motor Transport Co. v. Trucking

Unlimited, 404 U.S. 508 (1972)................ 10-12

Collins Securities Corp. v. SEC, 562 F.2d 820

. Cie, 1977) onc ve ev cekecne basa 17, 22

Eastern Railroad Presidents Conference v. Noerr

Motor Freight, 365 U.S. 127 (1961)............. 10-12

(121)

Cases, continued: Page

Faulkner Radio, Inc. v. FCC, No. 79-1749 (D.C.

Oe ee a ene a a 2, 7,18

Faulkner Radio, Inc. v. FCC, 557 F.2d 866

OR ORS oe) eee oe re ee er ee ee eee 2,6, 14

Faulkner Radio, Inc., 61 F.C.C.2d 23 (1976) ......... 5,18

FCC v. Sanders Bros. Radio Station, 309 U.S.

og BO RP OR ae ee ed eee 9, 12-13

Office of Communication of United Church of

Christ v. FCC, 359 F.2d 994 (D.C. Cir.

Re bebe ck bb ae ie WS eR sk ODO 9-10

Radio Carrollton, 72 F.C.C.2d 264 (1979) ....... a, Fe Oi 8S

Radio Carrollton, 69 F.C.C.2d 424 (1978) ......... 2, 7,15

Radio Carrollton, 69 F.C.C.2d 1139 (1978)...... 2,6, 12, 14

Radio Carrollton, 52 F.C.C.2d 1173 (1975)...... 2, 4, 5, 8, 10

Radio Carrollton, 52 F.C.C.2d 1187 (I.D. 1974) ...... 2, 4, 5

Radio Carrollton, 43 F.C.C.2d 472 (Rev. Bd. 1973) ....... 4

Radio Carrollton, 38 F.C.C.2d 68 (1972) .............. +

Sea Island Broadcasting Corp. of S.C. v. FCC,

627 F.2d 240 (D.C. Cir. 1980), cert.

denied, ___ U.S. ___.,, 49 U.S.L.W.

UN ICs elec (ea ar ey gs fa 7, 15, 17-18

Steadman v. SEC, 603 F.2d 1126 (5th Cir.

1979), cert. granted, .... U.S. —.., 48

U.S.L.W. 3698 (1980) (No. 79-1266)............ 16-17

United Mine Workers v, Pennington, 381 U.S.

See SUG eee en ea er ee Ceres ec 10-11

Vermont Yankee Nuclear Power Corp. v. Natural

Resources Defense Council, Inc., 325 U.S.

i, it a RES oe OT er Lane 16

(wv)

Constitutional Provisions, Statutes Page

and Regulations:

First Amendment to the Constitution of

Ue Tier BIRIREs a nc he ewe rewene 3, 8, 10-12, 15

Title 18, United States Code (1976):

LO TLRS. BIGOE nce eee che eee ees eee cesses rs 18

Communications Act of 1934, as amended (1976):

OF RR eb ae ha bene eke see eer en ee ees 19

ets i eee ee ee ee 3,9, 13-14, 19

ie a) a eee ae mea oe 19

BF URE. BOGE e cc ccs ieee ee ce weasceveene 12,17

Rules and Regulations of the Federal Communi-

cations Commission (1979):

OF Py Te, bn 000k eee Oe eee eee 19

ee A RS | errr cere ee eee ee Se §,9

Other Authorities:

H.R. Rep. No. 1800, 86th Cong,, 2d Sess. (1960) ....... 14

S. Rep. No. 96-1055, 96th Cong., 2d Sess. (1980) ....... 22

S. Rep. No. 1231, 84th Cong., Ist Sess. (1955) ......... 13

S. Rep. No. 44, 82nd Cong., ist Sess. (1951) .......... 13

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1980

No.

FAULKNER RapIo, INC.,

Petitioner,

FEDERAL COMMUNICATIONS COMMISSION,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Petitioner, Faulkner Radio, Inc., petitions that a wnt

of certiorari issue to review the judgment of the United

States Court of Appeals for the District of Columbia

Circuit.

PARTIES TO PROCEEDING

In addition to Faulkner Radio, Inc.' and the Federal

Communications Commission, William P. Johnson and

‘In accordance with Rule 28.1 of the Rules of the Supreme

Court of the United States, it is noted that Faulkner Radio, Inc. is

a closely held corporation with no subsidiaries or affiliates.

]

Hollis B. Johnson, d/b/a Radio Carrollton, were parties to

the proceedings before the Federal Communications

Commission.

OPINIONS BELOW

The opinion of the United States Court of Appeals for

the District of Columbia Circuit for which petitioner

seeks review is Faulkner Radio, Inc. v. Federal Communt-

cations Commission, No. 79-1749 (October 15, 1980).

That decision is not reported, but it is reproduced at

pages la-2a of the Appendix.” The decision of the lower

court affirmed decisions of the Federal Communications

Commission, reported as Radio Carrollton, 72 F.C.C.2d

264 (1979), App. 3a; Radio Carrollton, 69 F.C.C.2d 424

(1978), App. 15a; and Radio Carrollton, 69 F.C.C.2d

1139 (1978), App. 17a.

Those decisions were reached after remand by the

lower court in Faulkner Radio, Inc. v. Federal Communi-

cations Commission, 557 F.2d 866 (D.C. Cir. 1977),

App. 36a, of the decision of the Federal Communications

Commission in Radio Carrollton, 52 F.C.C.2d 1173

(1975), App. 59a, affirming the initial decision reported

at 52 F.C.C.2d 1187 (1.D. 1974), App. 73a.

JURISDICTION

The judgment of the court of appeals was entered on

October 15, 1980. App. la. The jurisdiction of this Court

is invoked under 28 U.S.C. § 1254 (1) (1976).

* The appendix (App.) to this petition is set forth under separate

cover.

CONSTITUTIONAL PROVISIONS,

STATUTES AND REGULATIONS INVOLVED

This case involves the First Amendment to the Consti-

tution of the United States; Sections 309(d)-(e) of the

Communications Act of 1934, as amended, 47 U.S.C.

§ § 309(d)-(e) (1976); and Section 73.3584 of the Rules

and Regulations of the Federal Communications Commis-

sion, 47 C.F.R. §73.3584 (1979). These provisions are

reproduced in the Appendix at 127a-133a.

STATEMENT OF THE CASE

Petitioner Faulkner Radio, Inc. (“Faulkner”) is the

licensee of standard (AM) Broadcast Station WLBB,

Carrollton, Georgia. Petitioner is also the licensee of six

other radio stations in Georgia and Alabama. On Novem-

ber 29, 1967, William P. Johnson and Hollis B. Johnson,

doing business as Radio Carrollton (“RC”), filed an

application with the Federal Communications Commis-

sion for authority to construct and operate a new

standard broadcast station at Carrollton, Georgia. On

June 18, 1968, Faulkner filed a Petition to Deny the RC

application. Section 309(d)(1) of the Communications

Act of 1934, as amended, 47 U.S.C. §309(d)(1), provides

that any party in interest may file with the Commission a

petition to deny any application. Faulkner, licensee of a

station with which the proposed RC station would be in

direct competition for advertising revenues and listening

audience, was clearly a “party in interest.”

On November 15, 1972, the Commission designated

for hearing the RC application for a construction permit

and the Faulkner application for renewal of WLBB’s

license. Although the two applications were not mutually

exclusive, the Commission determined that the factual

disputes involved “inextricably connect[ed]” the applica-

tions and consolidated them for one hearing. Radio

Carrollton, 38 F.C.C.2d 68, 69 (1972), App. 119a, 120a.

The Commission initially specified seven issues in the

proceeding. Two of the issues specified against RC were

raised by Faulkner in its original Petition to Deny. The

only two issues specified against Faulkner were: 1)

Whether Faulkner had filed its Petition to Deny for the

purpose of delaying the processing of the RC application,

and, if so, what effect that conduct had on the basic

qualification of Faulkner to be a Commission licensee;

and 2) Whether Faulkner or RC had misrepresented itself

to the Commission in its affidavit recounting the details

of the telephone conversation on June 20, 1968, between

Thorburn, a Faulkner principal, and Johnson. Jd. at 75,

App. 126a. On October 18, 1973, the Review Board

added an issue against RC to determine whether another

party had a secret one-third ownersiiip interest in RC and

whether RC had been lacking in candor with the Commis-

sion concerning this interest. Radio Carrollton, 43

F.C.C.2d 472 (Rev. Bd. 1973), App. 115a.

The Administrative Law Judge’s Initial Decision

granted the RC application for a construction permit and

denied Faulkner’s application for renewal of Station

WLBB. Radio Carrollton, 52 F.C.C.2d 1187 (I.D. 1974),

App. 73a. This Decision was affirmed by the Commission

on April 30, 1975. Radio Carrollton, 52 F.C.C.2d 1173

(1975), App. 59a.

Both the ALJ and the Commission found that Faulk-

ner’s principal, Thorburn, had made misrepresentations

to the Commission in affidavits filed with the Faulkner

Petition and supplements as well as in his testimony.

Both also concluded that at least one of Faulkner’s

purposes in filing its Petition to Deny was to delay the

RC application. The ALJ compared the filing of a

petition to deny for purposes of delay to the Commis-

sion’s strike application policy. Radio Carrollton, 52

F.C.C.2d at 1227 & n. 37, App. 113a. In affirming the

ALJ’s Decision, the Commission stated that the ALJ’s

comparison of a strike application to a petition to deny

filed for delay was “‘apt.’” Radio Carrollton, 52 F.C.C.2d

at 1178, App. 64a. The Commission then applied the

“guidelines” of its strike application policy to the Peti-

tion to Deny filed several years earlier by Faulkner and

determined that Faulkner had filed a “‘strike”’ petition to

deny, thus placing its own license in jeopardy.’ Jd. at

1178-80, App. 64a-66a.

In a collateral proceeding, the Commission has with-

held action on the renewal applications of Faulkner’s

other six radio stations. In Faulkner Radio, Inc., 61

F.C.C.2d 23, 25 (1976), App. 55a-57a, the Commission

held that, in lieu of a hearing on those applications, its

decision in Radio Carrollton with respect to WLBB would

be “res judicata;” and it would afford Faulkner only an

oral argument to determine whether the other six license

renewals should be granted.

The decision in Radio Carrollton was appealed by

Faulkner and was vacated and remanded by the United

>The Administrative Law Judge’s and the Commission’s use of

the analogy of “strike applications’’ as a basis for holding that a

petition to deny becomes a strike petition when filed for delay

purposes was completely without foundation. There is no constitu-

tional right to influence another person to file an application, nor

has it been decided that there is a constitutional right to file an

application. Whether or not the Commission’s prior rulings on

strike applications are valid, it is clear that the rights of Faulkner

are completely different. It is significant, however, that the

Commission could find no other authority to support its action in

this proceeding.

States Court of Appeals for the District of Columbia

Circuit because of the conduct of the ALJ. The Court

also expressed concern that the Commission’s strike

petition policy would have a “chilling effect’? on other

licensees desiring to file petitions to deny and stated that

on remand the Commission would be “well advised to

clarify its policy on strike petitions.” Faulkner Radio,

Inc. v. FCC, 557 F.2d 866, 873-76 (D.C. Cir. 1977), App.

36a, 48a-54a. However, no reference was made to peti-

tioner’s arguments concerning the constitutionality of the

Commission’s findings on delay.

In its decision on remand the Commission affirmed its

earlier finding that Faulkner was unqualified to remain a

Commission licensee. Radio Carrollton, 69 F.C.C.2d

1139 (1978), App. 17a. It also formulated new standards

for its strike petition policy, applied the new standards to

Faulkner’s petition filed ten years before, and concluded

that Faulkner had filed its petition for the “primary and

substantial” purpose of delaying the RC application. Jd.

at 1151-55, App. 29a-33a. Although the Commission

acknowledged that two of the three issues in the original

Petition to Deny and seven of the eight supplements

thereto were bona fide, the Commission nevertheless

concluded that Faulkner’s Petition to Deny and the June

1970 Supplement thereto were filed to delay the grant of

the RC application. Id. at 1154-55 & n. 30, App.

32a-33a. This, said the Commission, constituted a sepa-

rate and distinct ground for denying the Faulkner re-

newal application. Jd. at 1155, App. 33a.

In evaluating the evidence on remand, the Commission

repeatedly and consistently approached its evaluation as

an appellate court would, reviewing its earlier decision

and affirming it because it was supported by “substantial

evidence.” See Id. at 1143-48 & n. 23, App. 21a-26a.

However, on June 28, 1978, after the oral argument in

Sea Island Broadcasting Corp. of S.C. v. FCC,* in which

the Commission’s use of the term “‘substantial evidence”’

in the decision on remand in Radio Carrollton was

criticized, the Commission issued a “‘swa sponte reconsid-

eration” of its May 18 Order, stating that “‘in using the

inclusive term ‘substantial’ we meant there was reliable

and probative evidence in the record which clearly satis-

fied the customary preponderance of the evidence stand-

ard. ...”’ Radio Carrollton, 69 F.C.C.2d 424, 425 (1978),

App. 15a, 16a.

The Commission again considered the WLBB renewal

on petitions for reconsideration filed by Faulkner. See

Radio Carrollton, 72 F.C.C.2d 264 (1979), App. 3a. In

its decision on reconsideration, the Commission reaf-

firmed its decision on remand and further clarified its

strike petition policy, defining a strike petition to deny as

one filed with the primary purpose to delay. Jd. at 271 &

n. 10, App. 10a.

The decisions were appealed by Faulkner and affirmed

by the United States of Appeals for the District of

Columbia Circuit without opinion. App. la.

*The oral argument in Sea Island Broadcasting Corp. of S.C. v.

FCC, No. 76-1735, was held on June 2, 1978, two days after the

Commission’s decision on remand was released. The Court of

Appeals’ decision in Sea Island was released on January 14, 1980,

and is reported at 627 F.2d 240 (D.C. Cir. 1980). Certiorari in the

Sea Island case was denied on October 6, 1980. 49 U.S.L.W. 3246

(1980).

REASONS FOR GRANTING THE WRIT

THE FEDERAL COMMUNICATIONS COMMIS-

SION’S CONCLUSION DISQUALIF “{NG A LICEN-

SEE FOR FILING A “STRIKE” PETITION IS CON-

TRARY TO THE INTENT OF CONGRESS AND THE

RULINGS OF THIS COURT AND VIOLATES PETI-

TIONERS’ RIGHT TO PETITION PROTECTED BY

THE BILL OF RIGHTS

This is a case of first impression which imposes severe

restrictions upon the rights of licensees of broadcast

stations, resulting in serious adverse consequence to

the public. The Federal Communications Commission has

held that Faulkner must forfeit its license (of Standard

Broadcast Station WLBB, Carrollton, Georgia) because it

purportedly filed a “strike” petition to deny the applica-

tion of a potential competitor. In reaching this conclu-

sion, the Commission stated:

“the evidence clearly demonstrates Faulkner did file

a strike petition. Plainly, one of Faulkner’s purposes

was to obstruct, impede and delay the grant of RC’s

application. It is unnecessary to find this was Faulk-

ner’s sole—or even p ‘mary—purpose in order .. . to

put its license in jeopardy. Hence, we find Faulk-

ner’s arguments unpersuasive and we conclude its

petition was not filed for legitimate public interest

purposes.” Radio Carrollton, 52 F.C.C.2d at 1180,

App. 66a.

The significance attached to the alleged intent of

Faulkner in filing its petition to deny is further demon-

strated by the Commission’s conclusion that the petition

and a supplement thereto “were not filed on the basis of

public interest motives, even assuming arguendo they had

a reasonable basis in fact.” Jd. at 1179, App. 65a.

In its decisions issued subsequent to the remand, the

Commission reaffirmed its early statenents on delay and

again stressed the increased burden it places upon licen-

sees when filing a petition to deny, stating: “‘[t]he

‘strike’ petition policy involves a situation where a party

abuses our processes by claiming to act in furtherance of

general public interests when, in fact, his primary purpose

is to advance anticompetitive interests that have no place

in our regulatory scheme.” Radio Carrollton, 72 F.C.C.2d

at 271, App. 10a.

Faulkner submits that decisions of this Court clearly

hold that, so long as a party in interest complies with

constitutional, statutory and regulatory prescriptions, the

filing of a petition to deny ts manifestly a protected

constitutional right; and the filing may not be found to

be illegal or improper, assuming that the petition is not a

“sham pleading,” even if the primary purpose in filing is

to obstruct, impede or delay the grant of an application.°

Faulkner, as the record amply demonstrates, complied

with all of the prescribed statutory and regulatory proce-

dures. The Commission made no findings to the con-

trary, being primarily concerned with the “delay” of the

proceeding resulting from the pleadings.

Faulkner’s standing as a party in interest was predi-

cated on an allegation of economic injury as defined in

FCC v. Sanders Bros. Radio Station, 309 U.S. 479

(1940), rather than as a representative of the public

interest as defined in Office of Communication of United

Church of Christ v. FCC, 359 F.2d 994 (D.C. Cir.

*See footnote 8, infra.

® See Section 309(d)(1) of the Communications Act of 1934, as

amended, 47 U.S.C. § 309(d)(1) and Section 73.3584(a) of the

Commission Rules and Regulations, 47 C.F.R. § 73.3584.

1966).’ The distinction was of apparent significance to

the Commission which affirmed the ALJ’s conclusion

that “a ‘private attorney general’ who is also a potential

business competitor assumes a particularly difficult

burden respecting truthfulness and accuracy in bringing

charges against his potential adversary.” Radio Carroll-

ton, 52 F.C.C.2d at 1181, App. 67a. No legislative or

judicial support has been cited for that conclusion. To

the contrary, Congress and the courts have concluded

that only an unrestrained competitor is likely to bring to

the Commission’s attention allegations which the Com-

mission has the duty to investigate.

This Court has specifically addressed the question of a

citizen’s right to petition the government in decisions

relating to antitrust. E.g., California Motor Transport Co.

v. Trucking Unlimited, 404 U.S. 508 (1972); United Mine

Workers v. Pennington, 381 U.S. 657 (1965); Eastern

Railroad Presidents Conference v. Noerr Motor Freight,

365 U.S. 127 (1961). It is submitted that these decisions

are controlling in this case.

In Noerr, this Court held that no cause of action was

alleged insofar as it was predicated merely upon attempts

to influence the legislative branch for the passage of laws

or the executive branch for their enforcement. The Court

stated that:

“The right of petition is one of the freedoms

protected by the Bill of Rights, and we cannot, of

7 Representatives of the public interest are encouraged to bring

to the attention of the Commission pertinent facts concerning

present and prospective licensees. Indeed, the Commission issued a

revised News Release (No. 54751, September 5, 1975) indicating

that specific mailings were to be made by the Commission to

certain “public interest” groups “to ensure that they are informed

of Commission proceedings in which they may wish to par-

ticipate.”

course, lightly impute to Congress an intent to

invade these freedoms.” 365 U.S. at 138.

The Court also stated that “insofar as the railroads’

campaign was directed toward obtaining governmental

action, its legality was not at all affected by any anti-

competitive purpose it may have had.” Jd. at 149,

In Pennington, supra, this Court held that the lower

court had failed to take proper account of its holding in

Noerr “that anticompetitive purpose did not illegalize the

conduct there involved.” 381 U.S. at 669. The Court

went on to state:

‘‘Noerr shields from the Sherman Act a concerted

effort to influence public officials regardless of

intent or purpose.... Joint efforts to influence

public officials do not violate the antitrust laws even

though intended to eliminate competition. Such

conduct is not illegal, either standing alone or as

part of a broader scheme itself violative of the

Sherman Act.” 381 U.S. at 670.

Subsequently, it was held in California Motor that

“[t] he same philosophy governs the approach of citizens

or groups of them to administrative agencies (which are

both creatures of the legislature, and arms of the execu-

tive) and to courts, the third branch of Government.”

404 US. at 510.

It is clear from these cases that neither the intent nor a

financial or competitive interest in the outcome of the

legal actions of those who are asserting their nght to

petition jeopardizes that right.® As this Court has

declared:

Sin the Noerr— California Motor cases, the Supreme Court also

discussed conduct which would be a sham, conduct which was

completely different from Faulkner’s use of its statutory and

[footnote continued]

“Indeed, it is quite probably people with just such a

hope of personal advantage who provide much of

the information upon which governments must act.

A construction of the Sherman Act that would

disqualify people from taking a public position on

matters in which they are financially interested

would thus deprive the government of a valuable

source of information and, at the same time, deprive

the people of their right to petition in the very

instances in which that right may be of the most

importance to them.” Noerr, supra at 139.

The decision of the Commission has illegally modified

this Court’s ruling in Sanders, is contrary to the intent of

Congress, and has violated the protection guaranteed to

licensees by the Bill of Rights. Moreover, the Commission

has sacrificed the rights of the public simply to reduce its

administrative backlog and lighten its work schedule. The

Commission’s decision has had the effect of virtually

eliminating the filing of petitions to deny by licensees

against pending applications. °

In Sanders, supra, this Court held that a person who

suffered economic injury might be the only one with

sufficient interest to bring errors of law to the attention

of the appellate court. It specifically held that Congress

had intended to confer standing to such a person to

proceed under the provisions of Section 402(b).'° 309

constitutional rights. The Commission made no finding that the

petition to deny and the June 1970 Supplement were “‘sham

pleadings.” Indeed, it concluded that only one issue out of several

in the petition and only one of the eight supplements were

included for purposes of delay. Radio Carrollton, 69 F.C.C.2d at

1155 & n.30, App. 33a.

°The Commission’s records do not reveal how many, if any,

petitions to deny have been filed by licensees against applications

for new stations since the date of the original decision on this case.

1\Osee Section 402(b) of the Communications Act of 1934, as

amended, 47 U.S.C. § 402(b) (1976).

TS ee eR MT en MUTE es, Om eee oe

U.S. at 477, This Court clearly contemplated that such a

party could or would be motivated by an intent to delay.

Eleven years later, Congress enacted Section 309(c),'!

the so-called protest procedure, wherein it incorporated

this Court’s definition of a party in interest and gave

existing licensees the right to delay the effectiveness of a

grant of an application by requiring the Commission to

set such grants aside. See S. Rep. No. 44, 82d Cong., Ist

Sess. 8 (1951).

In 1960, Congress amended the Communications Act

to eliminate the protest procedure and substituted the

present provisions of Section 309(d).'* In earlier hearings

on Section 309(c) the Commission, members of the Bar,

and representatives of the public testified before commit-

tees of Congress that the protest procedure had allowed

existing licensees to file protests simply for the purpose

of delay. The Senate report found that “ ‘part[ies] in

interest’... have the power to force the holding of full

evidentiary hearings and to delay the institution of new

radio and television service.” S. Rep. No. 1231, 84th

Cong., Ist Sess. 2 (1955). There was no contention by

those testifying that such a purpose was illegal or im-

proper, but only that that statute should be changed to

give the Commission a method to reduce the delay caused

by such protests. In fact, the Report states that H.R.

5614 does not attempt to limit those who have standing

as a “party in interest” to file protests. Jd. at 3.

Thus Congress, as has this Court, has specifically

recognized the need to allow parties with an economic

"Section 309(c) of the Communications Act of 1934, as

amended, 47 U.S.C. § 309(c), Pub.L.No. 554, 66 Stat. 715 §7

(1952) (amended 1960).

'2Communications Act Amendments, 1960, Pub.L. 86-752, 74

Stat. 889 § 4(a) (1960).

interest to file pleadings with the Commission, since they

often were the only ones to have sufficient interest to

investigate, determine the facts and assume the expense

of bringing these charges to the attention of the Commis-

sion and then appearing at a hearing if one were ordered.

Therefore, it is clear that 309(d) was enacted to give the

Commission the authority to dismiss charges that had no

merit without a hearing in order to eliminate this delay.

No question was raised by Congress about the right of

such parties to file petitions even if they had an intent to

delay. See H.R. Rep. No. 1800, 86th Cong., 2d Sess. 9-14

(1960).

The “Commission has now added a new provision to

Section 309(d) by providing that an existing licensee

cannot utilize the rights conferred upon it by Congress if

its primary purpose is to delay an application. To this

end, the new strike petition policy contains five criteria,

all designed to determine one purpose alone—whether the

petitioner’s primary purpose was to delay.!°

The lower court expressed concern that the new policy

could have a chilling effect by preventing the flow of vital

information to the Commission and stated that such a

result would be inconsistent with the Congressional

intent and injurious to the public interest. Faulkner, 557

F.2d at 875, App. 52a-53a. However, on the second

appeal the Court of Appeals ignored this important factor

without any finding that the possibility of this serious

result had been eliminated.

It is submitted that the Commission has illegally

modified Section 309(d) of the Communications Act,

ignored the clear and specific rulings of this Court, and

'3 Radio Carrollton, 69 F.C.C.2d at 1151, App. 29a.

denied existing licensees the rights guaranteed by the Bill

of Rights. The result of this action will seriously limit the

Commission’s ability to fulfill its statutory mandate of

determining whether the public interest will be served by

a grant of applications for new broadcast facilities.

Il.

THE FEDERAL COMMUNICATIONS COMMISSION

IN FAILING TO EMPLOY THE SAME STANDARD

OF PROOF, I.E., CLEAR AND CONVINCING EVI-

DENCE, IN A RENEWAL PROCEEDING INVOLV-

ING DISQUALIFYING CHARACTER ISSUES, AS IT

MUST IN A REVOCATION PROCEEDING, ACTED

CONTRARY TO THE INTENT OF CONGRESS AND

VIOLATED BASIC PRINCIPLES OF DUE PROCESS

OF LAW

In its sua sponte reconsideration of its decision after

the remand, Radio Carrollton, 69 F.C.C.2d 424, App.

15a, the Commission announced for the first time that it

had employed the preponderance of the evidence stand-

ard in finding Faulkner unqualified to be a Commission

licensee. The Commission affirmed its use of the pre-

ponderance of the evidence standard in its subsequent

Memorandum Opinion and Order, Radio ‘Carrollton, 72

F.C.C.2d 264, App. 3a. The Commission erroneously

concluded that to use the standard of “‘clear and convinc-

ing” evidence urged by Faulkner would “prevent the

Commission from carrying out its statutory mandate and

would in effect establish a prohibited property interest in

a broadcast license.” Id. at 270-71, App. 9a-10a. This

argument was apparently accepted by the United States

Court of Appeals for the District of Columbia Circuit, the

same court which held in Sea Island Broadcasting Corp.

of S.C. v. FCC, 627 F.2d 240 (D.C. Cir. 1980), cert.

denied, 49 U.S.L.W. 3246 (1980), that the “‘clear and

convincing” standard of proof must be employed in

license revocation proceedings. Faulkner submits that the

reasons given by the lower court for applying the “clear

and convincing”’ standard in revocation proceedings apply

with equal, if not greater force, to license renewal

proceedings where disqualifying issues of character are

raised against the licensee.

One aspect of the issue of whether an administrative

agency’s findings must be supported by clear and con-

vincing evidence is currently before this court in Stead-

man uv. Securities and Exchange Commission, No.

79-1266. While that case concerns SEC disciplinary pro-

ceedings involving alleged violations of the anti-fraud

provisions of the securities laws, it presents the issue of

whether an agency determination which has the effect of

permanently excluding an individual or corporation from

the business regulated by that agency must be supported

by clear and convincing evidence, rather than by a mere

preponderance of the evidence. This Court’s disposition

of Steadman will definitely impact on other administra-

tive agency adjudications. Indeed, in oral argument be-

fore this Court, the General Counsel for the Securities

and Exchange Commission compared the impact of

Steadman on administrative adjudication to the impact of

Vermont Yankee Nuclear Power Corp. v. Natural Re-

sources Defense Council, Inc., 435 U.S. 519 (1978), on

administrative rule-making. Moreover, in oral argument in

this case before the United States Court of Appeals for

the District of Columbia Circuit, counsel for the Federal

Communications Commission suggested that the lower

court should wait until this Court issued its decision in

Steadman before rendering a decision on Faulkner’s

appeal.

While there is no conflict per se among the courts of

appeals on the specific issue presented in Faulkner’s

case,!* the conflict presented in the Steadman case (i.e.,

the Fifth Circuit’s holding in Steadman v. SEC, 603 F.2d

1126 (5th Cir. 1979), versus the District of Columbia

Circuit’s holding in Collins Securities Corp. v. SEC, 562

F.2d 820 (D.C. Cir. 1977)) directly affects Faulkner’s

case, since the Court of Appeals for the District of

Columbia specifically followed Collins in requiring the

Federal Communications Commission to employ the

“clear and convincing”’ test in license revocation proceed-

ings. In Sea Island, 627 F.2d at 244, the court held that

‘evocation of an FCC license is governed, at the agency

level, by the ‘clear and convincing’ standard of proof set

forth in the Collins decision fo. an SEC revocation of a

broker’s license.”’

The question presented in Faulkner’s case which. will

remain unresolved by Steadman is whether the standard

of proof employed in an administrative adjudication will

be determined by the type of proceeding involved (i.e., a

license revocation or suspension proceeding versus a

license renewal proceeding) or by the issues and ultimate

result to the party or parties whose rights are being

adjudicated by an administrative agency. This issue is of

critical importance to the broadcasting industry since, as

is demonstrated below, the Federal Communications

Commission can choose to raise charges involving mis-

representation and/or fraud (which, if proved, could

permanently disqualify a broadcast licensee) in either a

license renewal or a license revocation proceeding. In Sea

Island, supra, the District of Columbia Circuit held that

misrepresentation in a license revocation proceeding had

4By statute, appeal from an order denying an application for

renewal can only be made to the United States Court of Appeals

for the District of Columbia Circuit. 47 U.S.C. § 402(b)(2).

SS ee ee Se ee ee et

to be proved by clear and convincing evidence. However,

in Faulkner, the Court affirmed decisions of the FCC

which found Faulkner guilty of misrepresentation by a

mere preponderance of the evidence, with the result that

the licensee was held to be unqualified to remain a

licensee.

In Sea Island the court of appeals focused on the

severity of the sanction proposed: license revocation and

the ultimate loss of livelihood for the licensee. It was this

factor which the court found determinative in Sea Island

but ignored in Faulkner’s appeal. However, when a

broadcaster is found to lack the requisite character

qualifications to be a Commission licensee, the end result

(loss of license and loss of livelihood) is the same whether

the proceeding involved is a renewal or revocation pro-

ceeding. Disqualification is the most serious sanction the

FCC can impose on a licensee. It may involve more than

the revocation of a single license and more than the

failure to renew a single license. When a disqualifying

character issue is raised against a broadcast licensee,

resolution of the issue affects all the licensee’s broadcast

holdings and permanently impairs its ability (and the

ability of its principals) to be a licensee in the future.'5

Moreover, when that disqualifying issue involves mis-

representation to the Commission, criminal charges may

also be brought against the licensee. See 18 U.S.C. §1001

(1976).

'SIn Faulkner’s case, the Commission has held that its finding

that Faulkner is unqualified to be a Commission licensee will be

“res judicata” with respect to Faulkner’s six other radio stations

whose renewal applications are pending. In so doing, the Commis-

sion refused to allow Faulkner the normal evidentiary hearing on

the six renewal applications. See Faulkner Radio, Inc., 61 F.C.C.2d

23, 25 (1976), App. 55a, 57a.

The Communications Act of 1934, as amended, does

provide separately for license renewal and license revoca-

tion proceedings. Compare 47 U.S.C. §307(a) (1976)

with 47 U.S.C. §312 (1976). It also provides that the

burden of proof is on the renewal applicant insofar as the

ultimate conclusion of whether a grant will serve the

public interest is concerned. See 47 U.S.C. §309(e)

(1976). However, the Act does not address the question

of what standard of proof is required before the FCC

may make an adverse finding against a licensee on a

specific charge involving misrepresentation or fraud in

either a revocation or renewal proceeding. What Congress

did not foresee or intend was that the Commission would

apply a different standard of proof, insofar as specific

charges of misrepresentation or fraud were concerned, in

each type of proceeding. Since the Act allows the

Commission to select the type of proceeding to be used

when it considers charges which can result in the perma-

nent disqualification of a licensee, the Commission can

control the standard of proof to be applied and thus, in

effect, control the outcome of a case.

Although a broadcast license period is generally three

years, the Commission, by its own regulations, may direct

a licensee to file its application for renewal prior to its

established filing date. See 47 C.F.R. §73.3539(c)

(1979). Furthermore, when charges are raised against a

licensee during a license term, the Commission can

decline to proceed by a revocation proceeding and elect,

as it did in Faulkner’s case, to wait until after the licensee

files its renewal application to raise those issues against

the licensee. In view of the Commission’s ability to select

the type of proceeding in which a disqualifying issue

against a licensee can be litigated, no artificial distinction

between license revocation and license renewal proceed-

ings should be countenanced insofar as the standard of

proof is concerned.

In Addington v. Texas, 441 U.S. 418, 423 (1979), this

Court noted:

“The function of a standard of proof, as that

concept is embodied in the Due Process Clause and

in the realm of factfinding, is to ‘instruct the

factfinder concerning the degree of confidence our

society thinks he should have in the correctness of

factual conclusions for a particular type of adjudica-

tion.’ [Citation omitted.] The standard serves to

allocate the risk of error between the litigants and to

indicate the relative importance attached to the

ultimate decision.”’ (Emphasis added.)

The Court also described the three standards or levels of

proof for different types of cases, noting:

“At one end of the spectrum is the typical civil case

involving a monetary dispute between private par-

ties. Since society has a minimal concern with the

outcome of such private suits, plaintiff’s burden of

proof is a mere preponderance of the evidence. The

litigants thus share the risk of error in roughly equal

fashion.

OK OK OK OF

“The intermediate standard, which usually em-

ploys some combination of the words ‘clear,’

‘cogent,’ ‘unequivocal,’ and ‘convincing’ is less com-

monly used. . . . One typical use of the standard is in

civil cases involving allegations of fraud or some

other quasi-criminal wrongdoing by the defendant.

The interests at stake in those cases are deemed to

be more substantial than mere loss of money and

some jurisdictions accordingly reduce the risk to the

defendant of having his reputation tarnished errone-

ously by increasing the plaintiff’s burden of proof.”

Id. at 423-24 (emphasis added).

In determining which standard to employ in Addington, a

civil commitment proceeding, this Court weighed the

interests at stake for the individual and the state, con-

cluding that “[t]he individual should not be asked to

share equally with society the risk of error when the

possible injury to the individual is significantly greater

than any possible harm to the state.” Jd. at 427.

A similar weighing of the interests must be undertaken

here. As noted above, for the broadcast licensee there can

be no more serious finding by the Commission than that

the licensee is unqualified to remain a licensee because it

lacks the requisite character qualifications. Moreover,

since character issues generally involve a question of

fraud or misrepresentation, there is an obvious risk of

permanent damage to the licensee’s reputation. In con-

trast, the FCC has an interest in allocating a scarce

resource to those qualified to hold a broadcast license,

and the Commission must have absolute trust and confi-

dence in the representations made to it by its licensees. In

balancing these interests, it must be emphasized that the

risks to the individual are presented in the context of an

administrative adjudication where the Commission per-

forms the functions of investigator, prosecutor, and

ultimate factfinder. Clearly, the possible injury to the

individual broadcast licensee, i.e., loss of livelihood and

irreparable injury to the licensee’s reputation, is signifi-

cantly greater than any harm to the public if, because it is

required to employ a clear and convincing standard of

proof in making findings of fraud or misrepresentation,

an administrative agency may license a person lacking in

some degree the very high standard of public stewardship

expected of broadcast licensees.

In Faulkner’s case the standard of proof selected was

critical. The principal issues raised against Faulkner in-

volved its purpose or intent in filing a pleading with the

Federal Communications Commission and whether mis-

representations had been made about that purpose or

intent. The findings against Faulkner are related to the

expressed or implied intent and motivation of Faulkner

and its former Vice President and minority stockholder.

The findings on character issues involving motive and

misrepresentation, based upon a preponderance of the

evidence standard, may well cause Faulkner Radio, Inc.

to lose all seven of its radio station licenses. It is

submitted that, if findings had been based upon a “clear

and convincing evidence” standard, the renewal applica-

tion of Station WLBB would have been granted. Such a

result makes a mockery of the cherished principle that

the American government is one of laws and not of men

and would never have been permitted by Congress if it

could have foreseen that this inequitable procedure

would be established by administrative fiat. '®

Clearly, this is an important matter of administrative

law affecting a substantial number of American citizens

which must be resolved by the judiciary in the absence of

specific statutory authority. See, e.g., Woodby v. INS,

385 U.S. 276, 284 (1966); Collins Securities Corp., supra,

562 F.2d at 823.

'°See S. Rep. No. 96-1055, 96th Cong., 2d Sess. 11-13 (1980).

CONCLUSION

For the foregoing reasons, the requested petition for a

writ of certiorari should be granted.

Respectfully submitted,