Reply Brief — Satellite Broadcasting & Communications Ass'n of America v. Ringer

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In THE

Supreme Court of the United States

OCTOBER TERM, 1994

SATELLITE BROADCASTING & COMMUNICATIONS

ASSOCIATION OF AMERICA, éf al.,

¥ Petitioners,

MARYBETH PETERS, in her capacity as

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

REPLY BRIEF OF PETITIONERS

CARTER G. PHILLIPS *

R. CLARK WADLOW

MARK D. HOPSON

NATHAN C. SHEERS

SIDLEY & AUSTIN

1722 Eye Street, N.W.

Washington, D.C. 20006

(202) 736-8000

Counsel for Petitioners,

Satellite Broadcasting &

Communications Association

of America, et al.

August 31, 1994 * Counsel of Record

WILBON - EPs PRINTING CO., Inc. - 789-0096 - WASHING. ON, D.C. 20001

—————————

S ev F

ee CA es Pah eae a

TABLE OF AUTHORITIES

CASES Page

ASARCO Inc. v. EPA, 578 F.2d 319 (D.C. Cir.

I ciasapicicicnccussinchircihaca Valcniahd Aa tel ee 3

Alabama Power v. Costle, 636 F.2d 323 (D.C. Cir

SIN iachnsnnicashsuachbnisieda a beck sa MeasiedighaibaC natalia he fat cna 3

Chevron U.S.A., Inc. v. National Resources Defense

Council, 467 U.S. 887 (1984) ................................. 2,3

Lechmere, Inc. v. NLRB, 112 §S. Ct. 841 (1992)... 2

Moragne v. States Marine Lines, Inc., 398 U.S. 375

bE BERS i ea a 5

NBC v. Satellite Broadcast Networks, Inc., 940

Ue Pe CN Ge BOE raritcscceretntcirtineniecetecnssoe 2

Natural Resources Defense Council, Inc. v. Gorsuch,

685 F.2d 718 (D.C. Cir. 1982), rev’d sub nom.

Chevron U.S.A., Inc. v. National Resources De-

fense Council, Inc., 467 U.S. 837 (1984) ........... 3

Patterson v. McLean Credit Union, 491 U.S. 164

$ | Dea Steels Bete PR Pte Gey eT 5

Variable Annuity Life Ins. Co. v. Clarke, 998 F.2d

1295 (5th Cir. 1993), cert. granted sub nom.,

NationsBank of North Carolina, N.A. v. Variable

Annuity Life Ins. Co., 114 S. Ct. 2161 (1994)... 4,7

STATUTES

A eR a 1

Cable Compulsory License; Definition of Cable

System, 57 Fed. Reg. 3284 (1992) -.......000000000.. 3, 4

In THE

Supreme Court of the United States

OCTOBER TERM, 1994

No. 93-2055

SATELLITE BROADCASTING & COMMUNICATIONS

ASSOCIATION OF AMERICA, et al.,

y Petitioners,

MARYBETH PETERS, in her capacity as

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Eleventh Circuit

REPLY BRIEF OF PETITIONERS

In the petition for a writ of certiorari, petitioners dem-

onstrated that the Eleventh Circuit’s decision to ignore

circuit precedent construing 17 U.S.C. § 111(f) and to

defer to the Copyright Office’s later interpretation of that

statutory language (1) contradicts this Court’s decisions

in Chevron and Lechmere, and (2) conflicts with de-

cisions in three other circuits. Respondents’ brief in op-

position ignores this Court’s decision in Lechmere and

manifestly mischaracterizes both the principle of stare

decisis and the bases for decision in the court of appeals

cases cited by petitioners. Moreover, respondents never

dispute the grave consequences to the satellite broadcast-

ing industry if the erroneous decision of the court below

is allowed to stand.

1. Respondents, like the court below, seek to ignore

this Court’s decisions in Chevron and Lechmere in order

to reach prematurely the issue of agency deference. Re-

spondents claim that because “[t]he [Copyright] Act does

not specifically address the question whether a satellite

carrier qualifies as a ‘cable system’ under Section 111,”

Opp. 2, the provision is somehow automatically ambig-

uous, and therefore subject to agency interpretation. No

such leap is warranted.

Prior to reviewing an agency’s regulatory interpreta-

tion, a reviewing court must first examine the statute to

determine if the intent of Congress is cleat. Chevron

U.S.A., Inc. v. National Resources Defense Council, Inc.,

467 U.S. 837, 843 (1984). Specifically, this Court stated

that “[i]f a court, employing traditional tools of statutory

construction, ascertains that Congress had an intention on

the precise question at issue, that intention is the law and

must be given effect.” Jd. at 843 n.9 (emphasis added).

Once such a determination has been made, “we adhere

to that determinatioi: under the doctrine of stare decisis,

and we judge an agency’s later interpretation of the stat-

ute against our prior determination of the statute’s mean-

ing.” Lechmere, Inc. v. NLRB, 112 S. Ct. 841, 847-48

(1992) (quoting Maislin Indus., U.S., Inc. v. Primary

Steel, Inc., 497 U.S. 116 (1990) ).

The Eleventh Circuit in NBC v. Satellite Broadcast

Networks, Inc., 940 F.2d 1467 (11th Cir. 1991)

(“SBN”) (Pet. App. 17a-25a), made just such a deter-

mination of the meaning of Section 111(f). After a

thorough examination of “the words Congress chose,”

Pet. App. 21a, and of what “Congress understood” at the

time, Pet. App. 23a, the court determined that Congress

had intended to include satellite broadcasters, not just

traditional wired cable operators, within the scope of

Section 111(f).* This determination of the meaning of

1In its rulemaking proceeding, the Copyright Office, unlike re-

spondents and the court below, readily admitted that the court in

SBN had concluded “that Congress intended satellite carriers to be

Section 111(f), Pet. App. 25a (“SBN is a cable system

as defined under § 111”), derived using traditional tools

of statutory interpretation, “is the law and must be given

effect” under Chevron. 467 U.S. at 843 n.9.* The court

below failed to accept this interpretation, and the decision

below conflicts with this Court’s decisions in Chevron and

Lechmere.

covered by the cable compulsory license. Cable Compulsory License;

Definition of Cable System, 57 Fed. Reg. 3284, 3291 (1992) (em-

phasis added). As noted in the petition, the Copyright Office

promulgated a contrary rule, not because of policy objectives, but

because of a disagreement on how the text of the statute was to be

interpreted. See Pet. App. 7; 57 Fed. Reg. at 3292.

2 Respondents (and the court below) argue that SBN is analogous

to the court of appeals decision reversed by this Court in Chevron.

See Opp. 5, Pet. App. 6a & n.7 (EPA regulation “contradicted prior

D.C. Circuit precedent”). This simply is not the case. In Natural

Resources Defense Council, Inc. Vv. Gorsuch, 685 F.2d 718 (D.C.

Cir. 1982), rev’d sub nom. Chevron U.S.A., Inc. Vv. National Re-

sources Defense Council, Inc., 467 U.S. 837 (1984), the court of

appeals did not reach its decision to disallow the EPA’s use of the

“bubble” concept in “nonattainment” schemes on the basis of cir-

cuit precedent that previously had construed the precise statutory

provision in question. National Resources Defense Council instead

attempted to analogize the Clean Air Act scheme at issue in the

case with the “NSPS” regulations at issue in ASARCO Inc. v. EPA,

578 F.2d 319 (D.C. Cir. 1978) (disallowing the use of the “bubble”

concept for “NSPS” regulations).

In an opinion conspicuously absent from the Eleventh Circuit’s

account of the history of Chevron, the D.C. Circuit specifically

held that the “bubble” concept was to be evaluated separately for

each statutory scheme under the Clean Air Act. Alabama Power

Co. Vv. Costle, 636 F.2d 323, 401-02 (D.C. Cir. 1979) (upholding the

use of the “bubble” concept for “PSD” regulations). Thus, D.C.

Circuit precedent permitted the use of the “bubble” concept in

appropriate circumstances. The court in National Resources De-

fense Council extracted general principles from the distinctions it

drew between the types of programs at issue in ASARCO and

Alabama Power and then chose to ignore the agency’s proffered

interpretation. National Resources Defense Council, 685 F.2d at

726 & n.38. Thus, the court of appeals decision reversed in Chevron

was not following binding precedent and the doctrine of stare

decisis.

This issue of the interplay between Lechmere and

Chevron in courts of appeals is a matter of fundamental

importance. Not only has the issue spawned a clear con-

flict among the circuits, but it also creates tremendous

uncertainty for litigants and trial costs concerning what

role stare decisis plays in administrative litigation. Ac-

cordingly, for the same reasons this Court decided Lech-

mere, it should review the decision in this case.

2. Respondents fail to distinguish the decisions from

other circuits that conflict with the approach adopted by

the court below. As discussed above, it is simply not

the case that the court in SBN did not consider congres-

sional intent in its interpretation of Section 111(f). Re-

spondent effectively concedes that under the approaches

taken by the Second, Fifth, and Eighth Circuits, once a

court reaches an interpretation based on congressional in-

tent, stare decisis requires subsequent panels to invalidate

later agency promulgations that are contrary to circuit

precedent. Opp. 9-12. It is irrelevant that “the court’s

prior construction of the Copyright Act in SBN did not

purport to review (let alone invalidate) the agency in-

terpretation that was before the court in this case.” Opp.

12. The court construed Section 111(f) of the Copyright

Act and the agency’s subsequent interpretation of that

provision expressly contradicts it. See Cable Compulsory

License; Definition of Cable System, 57 Fed. Reg. 3284

(1992). Therefore, the Eleventh Circuit’s decision to ig-

nore stare decisis and instead to defer to the Copyright

Office’s interpretation squarely conflicts with decisions of

the Second, Fifth, and Eighth Circuits.

3. Respondents argue that this petition should not be

held pending the decision in Variable Annuity Life In-

surance Co. v. Clarke, 998 F.2d 1295 (Sth Cir. 1993),

cert. granted sub nom., NationsBank, N.A. v. Variable

Annuity Life Insurance Co., 114 §S. Ct. 2161 (1994).

Respondents argue that the petition filed on behalf of the

Comptroller of the Currency in that case “raises no ques-

tion about the stare decisis effect of the [prior panel]

decision.” Opp. 10 n.4. Respondents fail to note, how-

ever, that the case is a consolidated action and that

the private petitioners—as well as the respondent in op-

position—presented as their first question whether the

Fifth Circuit had failed to apply correctly Chevron by

refusing to adopt the Comptroller's construction of the

statute at issue, an interpretation contrary to circuit pre-

cedent. Variable Annuity, No. 93-1612, Cert. Pet. at i.;

Variable Annuity, Nos. 93-1612, 93-1613, Br. Opp. at i.

4. The approach taken by the Eleventh Circuit of

summarily dismissing circuit precedent and the rule of

law it evinces is unwarranted. Respondents, like the

panel below, ignore the existing mechanisms for review of

prior panel decisions that petitioners set out at Pet. 15-16.

The circuit courts can review prior decisions en banc

and this Court can resolve conflicts among the circuits by

granting certiorari in appropriate cases. Congress is also

free to intervene and change the law, giving the applica-

tion of stare decisis “special force in the area of statutory

interpretation.” Patterson v. McLean Credit Union, 491

U.S. 164, 172-73 (1989). Respondents’ suggested ap-

proach of total deference to agency interpretations, Opp.

9, would effectively preclude judicial review of agency

statutory interpretafions and is unnecessary.

Furthermore, Congress is not currently considering leg-

islation to amend Section 111(f) and it is that statutory

provision which the court below and the Copyright Office

have interpreted. It begs the question at issue in this case

to assume that the current compulsory licensing provision

of Section 119 will—or will not—be extended to protect

satellite broadcasters. As this Court has noted, “[t]he

mere possibility of future legislation in this field does not,

of course, affect the legal merits of petitioner’s claim.”

Moragne Vv. States Marine Lines, Inc., 398 U.S. 375, 405

n.17 (1970).

5. There could be no clearer indication of the im-

portance of the question presented to the satellite broad-

casting industry than the filing of an amicus curiae brief

in opposition to certiorari by the Motion Picture Associa-

tion of America. Unsurprisingly, the MPAA, the largest

recipient of copyright royalties, seeks to dissuade this

Court from reviewing the decision below so that it can

fully “exploit” satellite broadcasters. Amicus Br. 4. Al-

though the policy issues addressed in the amicus brief are

not properly raised in this case, the MPAA amicus brief

does not accurately portray the problems facing the satel-

lite broadcasting industry if this Court does not review

the decision be:ow. While satellite broadcasters may re-

transmit approximately 20 different broadcast signals to

their subscribers, Amicus Br. 6, these broadcast signals

contain programs whose rights are held by literally hun-

dreds of rightholders. Absent Section 111(f) compulsory

licensing, every broadcast program, not just every signal,

would be the subject of copyright licensing before retrans-

mission would be permitted. Unlike nonbroadcast chan-

nels like HBO, local broadcasters do not hold national

distribution rights for the programs they broadcast—other

than those programs they produce themselves.

CONCLUSION

For the foregoing reasons, and those stated in the peti-

tion, the petition for a writ of certiorari should be

granted. In the alternative, the petition should be held

pending this Court’s decision in Variable Annuity Life

Insurance Co. Vv. Clarke, 998 F.2d 1295 (Sth Cir. 1993),