CBS Corp. v. Fed. Commc'ns Comm'n

• Decision Date: 02 November 2011
• Docket Number: No. 06–3575.,06–3575.
• Parties: CBS CORPORATION; CBS Broadcasting Inc.; CBS Televisionstations Inc.; CBS Stations Group of Texas L.P.; and KUTV Holdings, Inc., Petitioners v. FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents.
• Court: U.S. Court of Appeals — Third Circuit

39 Media L. Rep. 2545

54 Communications Reg. (P&F) 495

663 F.3d 122

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

v.FEDERAL COMMUNICATIONS COMMISSION; United States of America, Respondents.

No. 06–3575.

United States Court of Appeals, Third Circuit.

Argued Sept. 11, 2007.Decided July 21, 2008.Certiorari Granted, Judgment Vacated and Remanded from the Supreme Court of the United States May 4, 2009.Argued on Remand from the Supreme Court of the United States Feb. 23, 2010.Opinion Filed Nov. 2, 2011.

Robert Corn–Revere, Esq. (Argued), Davis Wright Tremaine LLP, Washington, D.C., Jerome J. Shestack, Esq., WolfBlock, Nancy Winkelman, Esq., Schnader Harrison Segal & Lewis, Philadelphia, PA, for Petitioners.

Jacob M. Lewis, Esq. (Argued), Joseph R. Palmore, Esq., Nandan M. Joshi, Esq., Federal Communications Commission, Office of General Counsel, Washington, D.C., Eric D. Miller, Esq., Thomas M. Bondy, Esq., United States Department of Justice, Washington, D.C., for Respondents.

John B. Morris, Jr., Esq., Center for Democracy & Technology, Washington, D.C., for Amici Curiae–Petitioners, Center for Democracy & Technology and Adam Thierer, Senior Fellow, The Progress & Freedom Foundation.Andrew J. Schwartzman, Esq., Media Access Project, Washington, D.C., for Amicus Curiae–Petitioner, Center for Creative Voices in Media, Inc.Carter G. Phillips, Esq., Sidley Austin LLP, Washington, D.C., for Amicus Curiae–Petitioner, Fox Television Stations, Inc.Christopher T. Craig, Esq., Sparks & Craig LLP, McLean, VA, for Amicus Curiae–Respondents, Parents Television Council, Inc.Thomas B. North, Pro Se Amicus Curiae–Respondent.David P. Affinito, Esq., Dell'Italia Affinito & Santola, Orange, NJ, for Amicus Curiae–Respondent, Morality In Media, Inc.Steven H. Aden, Esq., Alliance Defense Fund, Washington, D.C., for Amici Curiae–Respondents, Focus on the Family, Morality In Media, Inc. and Family Research Council.Before: SCIRICA, RENDEL and FUENTES, Circuit Judges.

OPINION OF THE COURT

RENDELL, Circuit Judge.

This matter comes before us on remand from the United States Supreme Court in light of its ruling in F.C.C. v. Fox Television Stations, Inc., 556 U.S. 502, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). This case, like Fox, involves a tightening of the Federal Communications Commission's standards for the broadcast of fleeting indecent material. Fox concerned the FCC's decision to abandon its safe harbor for expletives that are not repeated; this case considers the FCC's departure from its earlier policy exempting fleeting images from the scope of actionable indecency. While we can understand the Supreme Court's desire that we re-examine our holdings in light of its opinion in Fox—since both involve the FCC's policy regarding “fleeting material”—in Part A of this opinion we conclude that, if anything, Fox confirms our previous ruling in this case and that we should readopt our earlier analysis and holding that the Commission acted arbitrarily in this case. See CBS Corp. v. F.C.C., 535 F.3d 167 (3d Cir.2008), vacated by F.C.C. v. CBS Corp., ––– U.S. ––––, 129 S.Ct. 2176, 173 L.Ed.2d 1153 (2009). Accordingly, in Part B of this opinion we again set forth our reasoning and conclusion that the FCC failed to acknowledge that its order in this case reflected a policy change and improperly imposed a penalty on CBS for violating a previously unannounced policy. See id. at 188–89. We have reconsidered certain other aspects of our previous opinion and will not remand, but, instead, will rule in Part B that CBS's petition for review is granted in toto.

Part A: Our Prior Opinion and the Impact of Fox

I.

The treatment of fleeting indecency over the airwaves has been the subject of much consideration by the FCC and the courts over the last thirty years. This case involves a February 1, 2004 incident: the exposure, for nine-sixteenths of one second, of Janet Jackson's bare right breast during the live halftime performance of the National Football League's Super Bowl XXXVIII. ¹ The FCC issued a forfeiture order against CBS in March 2006, imposing a penalty of $550,000. See 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”). We described the FCC's reasoning in our previous opinion:

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 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)....

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 Forfeiture Order at ¶ 15.

CBS Corp., 535 F.3d at 172. CBS sought reconsideration under 47 C.F.R. § 1.106, which the FCC denied. See 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). Neither of these two orders acknowledged, much less explained, any change in the FCC's enforcement policy for fleeting indecent images.

CBS filed a petition for review in our Court, contending that the FCC's ruling that the fleeting nude image was actionable indecency constituted a change in policy, and its application to CBS was, therefore, arbitrary and capricious under the Administrative Procedure Act (“APA”), 5 U.S.C. § 706. Specifically, CBS urged that, before the incident in question, FCC policy provided that the “isolated use of expletives in broadcasts did not constitute actionable indecency under 18 U.S.C. § 1464.” CBS Corp., 535 F.3d at 176 (citing See In re Application of Pacifica Found., 95 F.C.C.2d 750, 1983 WL 182971 (1983)).

The FCC defended its actions on the basis that its earlier fleeting-material policy applied only to fleeting utterances and did not extend to fleeting images.² We rejected this contention:

During a span of nearly three decades, the Commission frequently declined to find broadcast programming indecent, its restraint punctuated only by a few occasions where programming contained indecent material so pervasive as to amount to “shock treatment” for the audience. Throughout this period, the Commission consistently explained that isolated or fleeting material did not fall within the scope of actionable indecency.

At the time the Halftime Show was broadcasted by CBS, the FCC's policy on fleeting material was still in effect. The FCC contends its restrained policy applied only to fleeting utterances—specifically, fleeting expletives—and did not extend to fleeting images. But a review of the Commission's enforcement history reveals that its policy on fleeting material was never so limited. The FCC's present distinction between words and images for purposes of determining indecency represents a departure from its prior policy.

Id. at 174–75.

Reviewing in detail the progression of FCC rulings leading up to the present, we could not find the distinction advocated by the FCC. Indeed, we could only reach the opposite conclusion:

[T]he balance of the evidence weighs heavily against the FCC's contention that its restrained enforcement policy for fleeting material extended only to fleeting words and not to fleeting images. As detailed, the Commission's entire regulatory scheme treated broadcasted images and words interchangeably for purposes of determining indecency. Therefore, it follows that the Commission's exception for fleeting material under that regulatory scheme likewise treated images and words alike. Three decades of FCC action support this conclusion.

Accordingly, we find the FCC's conclusion on this issue, even as an interpretation of its own policies and precedent, “counter to the evidence before the agency” and “so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”

Id. at 188 (quoting Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)).

Thus, we found that the ruling in this case represented a departure from prior policy that required an explanation:

The Commission's determination that CBS's broadcast of a nine-sixteenths of one second glimpse of a bare female breast was actionably indecent evidenced the agency's departure from its prior policy. Its orders constituted the announcement of a policy change—that fleeting images would no longer be excluded from the scope of actionable indecency....

[A]n agency cannot ignore a substantial diversion from its prior policies. See Ramaprakash v. FAA, 346 F.3d 1121, 1124 (D.C.Cir.2003) (agency must “provide a reasoned analysis indicating that prior policies and standards are being deliberately changed, not casually ignored”). As the Supreme Court explained in State Farm, an agency must be afforded great latitude to change its policies, but it must justify its actions by articulating a reasoned analysis behind the change.... CBS...