535 F.3d 167 (3rd Cir. 2008), 06-3575, CBS Corp. v. F.C.C.

Docket Nº:06-3575.
Citation:535 F.3d 167
Party Name:CBS CORPORATION; CBS Broadcasting Inc.; CBS Television Stations, Inc.; CBS Stations Group of Texas L.P.; and KUTV Holdings, Inc., Petitioners v. FEDERAL COMMUNICATION COMMISSION; United States of America, Respondents.
Case Date:July 21, 2008
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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535 F.3d 167 (3rd Cir. 2008)

CBS CORPORATION; CBS Broadcasting Inc.; CBS Television Stations, Inc.; CBS Stations Group of Texas L.P.; and KUTV Holdings, Inc., Petitioners

v.

FEDERAL COMMUNICATION COMMISSION; United States of America, Respondents.

No. 06-3575.

United States Court of Appeals, Third Circuit.

July 21, 2008

Argued Sept. 11, 2007.

As Amended Aug. 6, 2008.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Robert Corn-Revere, Esquire (Argued), Davis Wright Tremaine LLP, Washington, D.C., Jerome J. Shestack, Wolf Block Schorr and Solis-Cohen LLP, Philadelphia, PA, Attorneys for Petitioners.

Eric D. Miller, Esquire (Argued), United States Department of Justice, Civil Division, Joseph R. Palmore, Esquire, Federal Communications Commission, Office of General Counsel, Thomas M. Bondy, United States Department of Justice, Appellate Section, Washington, D.C., Attorneys for Respondents.

John B. Morris, Jr., Esquire, Center for Democracy & Technology, Washington, D.C., Attorney for Amici Curiae-Petitioners, Center for Democracy & Technology and Adam Thierer, Senior Fellow, The Progress & Freedom Foundation.

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Nancy Winkelman, Esquire, Schnader Harrison Segal & Lewis, Philadelphia, PA, Attorney for Amici Curiae-Petitioners, Former FCCOfficials Henry Geller and Glen O. Robinson.

Andrew J. Schwartzman, Esquire, Media Access Project, Washington, D.C., Attorney for Amicus Curiae-Petitioner, Center for Creative Voices in Media, Inc.

Carter G. Phillips, Esquire, Sidley Austin LLP, Washington, D.C., Attorney for Amicus Curiae-Petitioner, Fox Television Stations, Inc.

Christopher T. Craig, Esquire, Sparks & Craig LLP, McLean, VA, Attorney for Amicus Curiae-Respondent, Parents Television Council, Inc.

Thomas B. North, Pro Se Amicus Curiae-Respondent.

David P. Affinito, Esquire, Dell'Italia Affinito & Santola, Orange, NJ, Attorney for Amicus Curiae-Respondent, Morality In Media, Inc.

Before: SCIRICA, Chief Judge, RENDELL and FUENTES, Circuit Judges.

OPINION

SCIRICA, Chief Judge.

In this petition for review, CBS appeals orders of the Federal Communications Commission imposing a monetary forfeiture under 47 U.S.C. § 503(b) for the broadcast of “indecent" material in violation of 18 U.S.C. § 1464 and 47 C.F.R. § 73.3999. The sanctions stem from CBS's live broadcast of the Super Bowl XXXVIII Halftime Show, in which two performers deviated from the show's script resulting in the exposure of a bare female breast on camera, a deceitful and manipulative act that lasted nine-sixteenths of one second. CBS transmitted the image over public airwaves, resulting in punitive action by the FCC.

CBS challenges the Commission's orders on constitutional, statutory, and public policy grounds. Two of the challenges are paramount: (1) whether the Commission acted arbitrarily and capriciously under the Administrative Procedure Act, 5 U.S.C. § 706, in determining that CBS's broadcast of a fleeting image of nudity was actionably indecent; and (2) whether the Commission, in applying three theories of liability-traditional respondeat superior doctrine, an alternative theory of vicarious liability based on CBS's duties as a broadcast licensee, and the “willfulness" standard of the forfeiture statute-properly found CBS violated the indecency provisions of 18 U.S.C. § 1464 and 47 C.F.R. § 73.3999. We will vacate the FCC's orders and remand for further proceedings consistent with this opinion.

I.

On February 1, 2004, CBS presented a live broadcast of the National Football League's Super Bowl XXXVIII, which included a halftime show produced by MTV Networks.1 Nearly 90 million viewers watched the Halftime Show, which began at 8:30 p.m. Eastern Standard Time and lasted about fifteen minutes. The Halftime Show featured a variety of musical performances by contemporary recording artists, with Janet Jackson as the announced headlining act and Justin Timberlake as a “surprise guest" for the final minutes of the show.

Timberlake was unveiled on stage near the conclusion of the Halftime Show. He and Jackson performed his popular song “Rock Your Body" as the show's finale. Their performance, which the FCC contends

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involved sexually suggestive choreography, portrayed Timberlake seeking to dance with Jackson, and Jackson alternating between accepting and rejecting his advances. The performance ended with Timberlake singing, “gonna have you naked by the end of this song," and simultaneously tearing away part of Jackson's bustier. CBS had implemented a five-second audio delay to guard against the possibility of indecent language being transmitted on air, but it did not employ similar precautionary technology for video images. As a result, Jackson's bare right breast was exposed on camera for nine-sixteenths of one second.

Jackson's exposed breast caused a sensation and resulted in a large number of viewer complaints to the Federal Communications Commission.2 In response, the Commission's Enforcement Bureau issued a letter of inquiry asking CBS to provide more information about the broadcast along with a video copy of the entire Super Bowl program. CBS supplied the requested materials, including a script of the Halftime Show, and issued a public statement of apology for the incident. CBS stated Jackson and Timberlake's wardrobe stunt was unscripted and unauthorized, claiming it had no advance notice of any plan by the performers to deviate from the script.

On September 22, 2004, the Commission issued a Notice of Apparent Liability finding CBS had apparently violated federal law and FCC rules restricting the broadcast of indecent material. After its review, the Commission determined CBS was apparently liable for a forfeiture penalty of $550,000.3 CBS submitted its Opposition to the Notice of Apparent Liability on November 5, 2004.

The Commission issued a forfeiture order over CBS's opposition on March 15, 2006, imposing a forfeiture penalty of $550,000. In re Complaints Against Various Television Licensees Concerning Their February 1, 2004 Broadcast of the Super Bowl XXXVIII Halftime Show, 21 F.C.C.R. 2760 (2006) (“Forfeiture Order " ). Affirming its preliminary findings, the Commission concluded the Halftime Show broadcast was indecent because it depicted a sexual organ and violated “contemporary community standards for the broadcast medium." Id. at ¶ 10. In making this determination, the FCC relied on a contextual analysis to find the broadcast of Jackson's exposed breast was: (1) graphic and explicit, (2) shocking and pandering, and (3) fleeting. Id. at ¶ 14. It further concluded that the brevity of the image was outweighed by the other two factors. Id. The standard applied by the Commission is derived from its 2001 policy statement setting forth a two-part test for indecency: (1) “the material must describe or depict sexual or excretory organs or activities," and (2) it must be “patently offensive as measured by contemporary community

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standards for the broadcast medium." In re Industry Guidance on the Commission's Case Law Interpreting 18 U.S.C. § 1464 and Enforcement Policies Regarding Broadcast Indecency, 16 F.C.C.R. 7999, 8002 ¶¶ 7-8 (2001) (emphasis in original). The Commission had informed broadcasters in its 2001 policy statement that in performing the second step of the test-measuring the offensiveness of any particular broadcast-it would look to three factors: “(1) the explicitness or graphic nature of the description or depiction of sexual or excretory organs or activities; (2) whether the material dwells on or repeats at length descriptions of sexual or excretory organs or activities; (3) whether the material appears to pander or is used to titillate, or whether the material appears to have been presented for its shock value." Id. at ¶ 10 (emphasis omitted).

Additionally, the FCC determined CBS's actions in broadcasting the indecent image were “willful" and therefore sanctionable by a monetary forfeiture under 47 U.S.C. § 503(b)(1). See id. at ¶ 15. Adopting the definition of “willful" found in section 312(f)(1) of the Communications Act,4 the Commission offered three explanations for its determination of willfulness. Id. First, the FCC found CBS “acted willfully because it consciously and deliberately broadcast the halftime show, whether or not it intended to broadcast nudity...." Id. Second, the FCC found CBS acted willfully because it “consciously and deliberately failed to take reasonable precautions to ensure that no actionably indecent material was broadcast." Id. Finally, the FCC applied a respondeat superior theory in finding CBS vicariously liable for the willful actions of its agents, Jackson and Timberlake. Id.

On April 14, 2006, CBS submitted a Petition for Reconsideration under 47 C.F.R. § 1.106, raising several arguments against the Commission's findings and conclusions. In its Order on Reconsideration, the FCC rejected CBS's statutory and constitutional challenges and reaffirmed its imposition of a $550,000 forfeiture. In re Complaints Against Various Television Licensees Concerning Their February 1, 2004 Broadcast of the Super Bowl XXXVIII Halftime Show, 21 F.C.C.R. 6653 (2006) (“Reconsideration Order " ). The Reconsideration Order revised the Commission's approach for determining CBS's liability under the willfulness standard. The Commission reiterated its application of vicarious liability in the form of respondeat superior and its determination that CBS was directly liable for failing to take adequate measures to prevent the broadcast of indecent material. See id. at ¶ 16. But it abandoned its position that CBS acted willfully under 47 U.S.C. § 503(b)(1) by intentionally broadcasting...

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