Reply Brief — Celcom Communications Corp. of Pennsylvania v. Federal Communications Commission

| Supreme es =

y FIL

P )

FEB 3 1987

No. 86-830 JOSEPH F. SPANIOL, JR.

valt & RK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1986

CELCOM COMMUNICATIONS CORPORATION

OF PENNSYLVANIA,

Petitioner,

Vv.

FEDERAL COMMUNICATIONS COMMISSION, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

REPLY BRIEF FOR PETITIONER

EDGAR F’. CZARRA, JR.*

JONATHAN D. BLAKE

S. WILLIAM LIVINGSTON, JR.

Of Counsel: ALAN A. PEMBERTON

Sruart F. FELDSTEIN COVINGTON & BURLING

RICHARD RUBIN 1201 Pennsylvania Ave., N.W.

FLEISCHMAN AND WALSH, P.C.

1725 N Street, N.W.

Washington, D.C. 20036

(202) 466-6250

February 1987

P.O. Box 7566

Washington, D.C. 20044

(202) 662-6000

Counsel for Petitioner

* Counsel of Record

WBON - Epes PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF AUTHORITIES

CASES:

Celcom Communications Corp. of Georgia v. FCC,

ee ee Ge Cs CRE, MOD vesrecetteiccinicae

FCC v. Schreiber, 381 U.S. 279 (1965) .....................

AGENCY DECISIONS:

Celcom Communications Corp., FCC 86-423 (Oct.

CM acre ere Os ee aacemnideaiion

Cellular Systems (Reconsideration), 89 F.C.C.2d.

ns a a cantancasiouenininns

Page Boy, Inc., FCC Mimeo 5432 (June 27, 1986) ..

Page

me oO

4

IN THE

Siupreme Court of the United States

OCTOBER TERM, 1986

No. 86-830

CELCOM COMMUNICATIONS CORPORATION

OF PENNSYLVANIA,

Petitioner,

FEDERAL COMMUNICATIONS COMMISSION, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the District of Columbia Circuit

REPLY BRIEF FOR PETITIONER

Respondents FCC and Automatic Wide-Area Cellular

Systems, Inc. (““AWACS’) have skirted, not answered,

the difficult questions presented in the Petition.

1. Respondents label this case undeserving of review

because cellular comparative proceedings are a vanish-

ing breed. FCC Memo at 5; AWACS Br. at 4. But the

issues presented by Petitioner are net limited to cellular

radio cases. They have scope and importance for nu-

merous proceedings before the FCC and other agencies.

Respondents have not shown that the important ad-

ministrative procedural issues identified by Petitioner

are confined to cellular comparative proceedings. Nor ©

2

could they. The D.C. Circuit’s “tardiness doctrine” could

create chaos and condone unfairness in any agency case

involving the decisional significance of a pending or pro-

posed, but not-yet-consummated, transaction. There will

surely be many such cases. Moreover, the D.C. Circuit’s

“rulemaking appeal doctrine,” by precluding review of

the application of agency rules, procedures and policies

in later adjudicatory cases if the rules, procedures and

policies were not directly appealed at the time of their

adoption, is clearly applicable to a wide range of FCC

and other agency proceedings. The “rulemaking appeal

doctrine” could insulate arbitrary and irrational agency

adjudicatory action from judicial review in the many FCC

and other agency cases that apply earlier-promulgated

rules, procedures and policies to an individual applicant

which has not itself appealed their adoption. The Com-

mission’s cellular comparative hearing proceedings may

be nearing an end, but the harm created by the D.C.

Circuit’s rulings will endure and be applied to other

kinds of cases unless they are reviewed and reversed by

this Court.

2. Respondents’ contention that Petitioner was late in

raising the anticompetitive issue is erroneous because

Metromedia’s acquisition of RBC was not a “fact” until

the deal was consummated. Had Petitioner raised the

anticompetitive issue on the basis of AWACS’ earlier

disclosure of a mere proposed transaction, or even on the

basis of the Commission’s approval of that proposal, Pe-

titioner surely would have been rejected as being specula-

tive and premature.’

Respondents argue that RBC was from the outset both

a participant in the AWACS cellular venture and a

dominant paging competitor. Therefore, Respondents rea-

son, RBC’s acquisition by Metromedia was not the sig-

nificant event that Petitioner claims, because it merely

1The FCC’s trial staff even opposed Petitioner’s post-

consummation motion to reopen as speculative and premature!

3

substituted Metromedia for RBC as a potentially anti-

competitive collaborator with Lin, without changing the

nature of the anticompetitive risks.2 FCC Memo at 6;

AWACS Br. at 6. But Respondents’ argument founders

on the simple fact that Lin could not have been required

to collaborate closely with RBC. Only Metromedia, not

RBC, had a power of negative control of the AWACS

venture. By virtue of Metromedia’s role as the source

of all of the capital for the AWACS venture, Lin was

required as a practical matter to collaborate and achieve

consensus with Metromedia even though Lin held a 51

percent share. No such collaboration would have been

necessary between Lin and RBC.*

Respondent FCC, here conceding that the consumma-

tion of the Metromedia-RBC deal may have “raised some

new issues,” nonetheless urges that it was proper to have

held Petitioner untimely because provision of cellular

service to the public needed to be on a fast track, and

consideration of Petitioner’s anticompetitive argument

stood in the way of expedition. FCC Memo at 6-7.* The

2 Respondents’ argument was not relied upon either by the Com-

mission or the D.C. Circuit.

3 No collaboration between Lin and RBC would have been neces-

sary even if the Metromedia acquisition had never occurred. The

“full role” for RBC contemplated by the AWACS agreement in the

event Metromedia’s acquisition was not consummated (AWACS

Br. at 6-7) would not have resulted in close collaboration between

Lin and RBC because Lin would still have had the controlling 51

percent interest and RBC would have had no countervailing power

under the agreement similar to Metromedia’s.

4 The agency’s decision relied on no such reasoning. The agency

held Celcom untimely for failing to raise the anticompetitive issue

in the separate proceeding to approve the RBC acquisition. Pet.

App. 38a. This rationale was not the one ostensibly “affirmed” by

the D.C. Circuit. Respondent FCC glosses over this problem, while

Respondent AWACS disingenuously states that the D.C. Circuit

“affirm[ed] the Commission’s ruling that Celcom had an obligation

to come forward ... much earlier in this . .. expedited proceeding”,

4

expedition argument here is laughable, for the Commis-

sion sat on Celcom’s motion to reopen for more than a

year. In any event, agencies may not cut corners in the

interests of expedition, where, as here, such short cuts

disregard matters at the heart of their statutory man-

date.

Nor is there merit to Respondent FCC’s assertion that

this case now is moot. FCC Memo at 7. The authorities

cited by Respondent FCC to show that Lin has divested

itself of paging interests refer only to the New York

market and do not concern Lin’s status as a potential

paging competitor in the Philadelphia market. See Page

Boy, Inc., FCC Mimeo 5432 (June 27, 1986), cited in

Celcom Communications Corp., FCC 86-423 at 4, n.31

(Oct. 16, 1986). In any event, the Commission’s cel-

lular comparative hearing rules forbid “one-upsmanship”

in the forin of upgrading amendments, see, e.g., Cellular

Systems (Reconsideration), 89 F.C.C.2d 58, 89 (1982),

so that AWACS’ anticompetitive problems could not have

been cured by any divestiture after designation for hear-

ing.®

3. Respondents miss the point of Petitioner’s argu-

ment that the Court of Appeals erroneously refused to

review the application of FCC rules, procedures and pol-

icies to Petitioner’s Philadelphia application.* In the D.C.

and urges the Court to accord “wide latitude” to the agency's

“initial determination” of the procedural question. AWACS Br. at

8 (emphasis added). In fact, the D.C. Circuit’s error is compounded

because it has ignored the agency’s procedural ruling and created a

new one, contrary to FCC v. Schreiber, 381 U.S. 279, 290 (1965).

5 AWACS has not claimed mootness here.

* Respondent AWACS mischaracterizes Petitioner’s point as a

complaint about the D.C. Circuit’s approval of a “depart[ure]” by

the FCC from its original regulatory criteria (AWACS Br. at 8).

This is not Petitioner’s argument. AWACS also argues that the

preferences awarded to it by the FCC reflected reasoned decision-

5

Circuit Petitioner attacked the irrationality of the Com-

mission’s continuing to award preferences for application

proposals after it had disclaimed any interest in whether

applicants would actually implement their proposals. The

court’s response was merely the citation of the court’s

Atlanta decision.* Respondent FCC misconstrues Peti-

tioner’s argument before this Court by casting it as a

complaint that the Court of Appeals did not address this

point at all. FCC Memo at 8-9.

Contrary to Respondent FCC’s contention, mere cita

tion of the Atlanta case was not “a rejection of the argu-

ment once again on the merits.”” FCC Memo at 9. The

Atlanta decision never addressed the merits of the chal-

lenge made to the public-interest emptiness of the com-

parative preferences. Instead, the Court of Appeals said

in Atlanta merely that substantive review of the point

was foreclosed because there had been no appeal of the

original cellular rulemaking adopting the rules, proce-

dures and policies that were to govern cellular compara-

tive pr. eedings. Pet. App. 55a. Petitioner’s point here

is that the Atlanta decision was fundamentally wrong,

so that it was also fundamentally wrong to apply it in

this Philadelphia case. Petition at 16-25.

Respondent FCC fails to defend the Atlanta decision;

its memorandum appears instead to assume that, because

the Philadelphia case was merely an application of the

Atlanta precedent, there is no basis for this Court’s

review. This attempt to short-circuit this Court’s super-

visory powers must fail: the Court has the power to

review the Philadelphia decision and to pronounce un-

sound the Atlanta reasoning on which the Philadelphia

making. Such arguments are irrelevant, given the D.C. Circuit’s

reliance on the Atlanta precedent, which pretermitted review of

the rationality of the preferences.

™ Celcom Communications Corp. of Georgia v. FCC, 787 F.2d 609

(D.C. Cir. 1986), Pet. App. 5la-64a.

decision relies.

Court to do.

That is what Petitioner has asked the

The petition for a writ of certiorari should be granted.

Of Counsel:

STUART F. FELDSTEIN

RICHARD RUBIN

FLEISCHMAN AND WALSH, P.C.

1725 N Street, N.W.

Washington, D.C. 20036

(202) 466-6250

February 1987

Respectfully submitted,

EDGAR F.. CZARRA, JR.*

JONATHAN D. BLAKE

S. WILLIAM LIVINGSTON, JR.

ALAN A. PEMBERTON

COVINGTON & BURLING

1201 Pennsylvania Ave., N.W.

P.O. Box 7566

Washington, D.C. 20044

(202) 662-6000

Counsel for Petitioner

* Counsel of Record