Game, Set, Match: DC Circuit Makes Final Ruling in “Tennis Channel v. FCC”

tenniscourtBy John Easter, Judge K.K. Legett Fellow at Washington Legal Foundation and a rising third-year student at Texas Tech University School of Law.

The United States Court of Appeals for the DC Circuit has likely brought an end to a seven-year-long dispute involving Tennis Channel, Inc., Comcast, and the Federal Communications Commission (FCC).  The July 5, 2016 decision in Tennis Channel, Inc. v. Federal Communications Commission is the DC Circuit’s second consideration of the petitioner’s claim that Comcast discriminated against Tennis Channel in favor of affiliated networks when determining channel offerings to its cable customers.

Under § 616 of the Communications Act, discrimination occurs when multichannel video programming networks (like Comcast) “unreasonably restrain the ability of an unaffiliated video programming vendor to compete fairly.”  Tennis Channel, Inc. complained to the FCC that Comcast’s refusal to provide consumers access to the Tennis Channel on terms equal to those for Comcast’s own Golf Channel and NBC Sports Network violated § 616.  Before an FCC administrative law judge (ALJ), Comcast argued that legitimate business reasons supported its offering decision.

In a 2012 Initial Order, the FCC ALJ found that Comcast discriminated against Tennis Channel.  The DC Circuit granted Comcast’s petition for review and found the evidentiary record was insufficient to support Tennis Channel’s discrimination claim (as discussed here in a June 10, 2013 WLF Legal Pulse post).  The court remanded proceedings to the FCC.  In its 2015 Remand Order, the FCC denied Tennis Channel’s request to reevaluate the company’s initial complaint and to reopen the record for submission of additional evidentiary findings.

In that order, the FCC held the DC Circuit’s decision in Tennis I adequately considered the administrative record and “neither invited nor directed the Commission to address on remand the evidentiary shortcomings identified in its decision.”  Tennis Channel petitioned the DC Circuit, challenging the FCC’s denial of further proceedings.

Tennis Channel argued the FCC had an obligation to make independent findings following remand and that the circumstances of its case compelled the Commission to permit further briefing.  First, Tennis Channel suggested a reexamination of the record would lead the court to conclude that Comcast’s “business considerations” were a thinly veiled attempt at discrimination.  Tennis Channel repeated its claim from earlier proceedings that Comcast would benefit financially from including the channel on a more accessible level.  Second, Tennis Channel argued that because the DC Circuit set out a “new” evidentiary test in Tennis I for discrimination claims, the court should grant it the opportunity to provide evidence tailored to this purportedly new test.  For those two reasons, Tennis Channel argued, the FCC’s failure to conduct an entirely new hearing on remand was arbitrary and capricious.

The DC Circuit panel disagreed, holding that the FCC properly interpreted the Tennis I court’s remand order as not requiring the Commission to engage in further fact finding.  The FCC was well within its discretion to reach its decision based on the original record.  As to whether Tennis I created a new evidentiary test for discrimination, the DC Circuit explained that the Tennis I panel was merely noting what type of evidence would be sufficient to establish discrimination, not setting out factors for the FCC to apply on remand.  The FCC understood the “new” test was mere dicta, saying as much in its Remand Order.

As a final point, the court rebutted Tennis Channel’s argument that the FCC’s decision not to reopen its § 616 claim deserved review.  Such agency decisions are not judicially reviewable, the court explained, unless the aggrieved party’s petition presents new evidence or changed circumstances.  The best Tennis Channel could come up with—at oral argument before the DC Circuit—was that it could produce expert testimony that Comcast would earn increased advertising revenue by offering the Tennis Channel on the same programming tier as the Golf Channel.  The court’s opinion questioned why Tennis Channel did not offer that evidence to the FCC’s ALJ originally and chided the company for asking the DC Circuit to correct “a problem of its own making.”

The FCC’s role in disputes such as that between Tennis Channel and Comcast is akin to a tennis line judge’s job: make a decision based on all the available evidence.  It failed in that role initially, and Comcast appealed to the chair umpire (i.e., the DC Circuit), which properly overruled the FCC.  In tennis, that’s where the appeals end.  Tennis Channel got another bite at the apple with the FCC, but the Commission, uninterested in being overturned again, adopted the Tennis I court’s decision.  In rejecting Tennis Channel’s call for reopening the record, the FCC stated that “the interest in bringing the proceeding to a close outweigh[ed] any interest in allowing Tennis Channel a second opportunity to prosecute its program carriage complaint.”

The DC Circuit’s decision in Tennis Channel v. FCC reaffirms the importance of administrative finality.  Highly regulated businesses rely on the transparency and predictability of laws and rules for efficiency.  Agency delays in making decisions can impede businesses’ planning, which comes at the cost of lost opportunities and profits.  Lack of finality in agency proceedings not only hinders the parties involved but also negatively impacts other participants in those industries that look to agency decisions as indicators of how regulations will be enforced.

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