Minn.-Iowa Television v. Watonwan TV Imp.

• Decision Date: 30 May 1980
• Docket Number: 50348.,No. 50290,50290
• Citation: 294 NW 2d 297
• Parties: MINNESOTA-IOWA TELEVISION COMPANY, Respondent-Appellant, v. WATONWAN T.V. IMPROVEMENT ASSOCIATION, Appellant-Respondent.
• Court: Minnesota Supreme Court

294 N.W.2d 297 (1980)

MINNESOTA-IOWA TELEVISION COMPANY, Respondent-Appellant, v. WATONWAN T.V. IMPROVEMENT ASSOCIATION, Appellant-Respondent.

Nos. 50290, 50348.

Supreme Court of Minnesota.

May 30, 1980.

Leonard, Street & Deinard, Sidney Barrows and Charles A. Mays, Minneapolis, for respondent-appellant.

Birkholz & DeHenzel, Daniel A. Birkholz and Robert J. DeHenzel, Jr., St. James, for appellant-respondent.

Heard, considered and decided by the court en banc.

YETKA, Justice.

Minnesota-Iowa Television Company (hereinafter "KAAL") brought this action against Watonwan T.V. Improvement Association (hereinafter "Watonwan") to enforce the terms of a contract between them. On March 30, 1979, the Fifth Judicial District Court granted KAAL's request for a temporary restraining order (TRO) but stayed the TRO until April 13. On April 9, Watonwan filed a notice of appeal from the granting of the TRO and sought in this court both a stay of the TRO and a writ of prohibition against the district court. Both requests were denied on April 13, and the TRO went into effect.

In the interim, Watonwan applied on April 2 to the Chief of the Broadcast Bureau of the Federal Communications Commission (FCC) for a ruling as to the validity of the contract under FCC regulations. On April 5, the Bureau Chief denied the request. Watonwan then presented its petition to the full commission of the FCC on April 10. That petition is still pending, and the parties state it is not possible to know when the FCC will rule on the petition.

On May 22, the case came on for trial by the district court without a jury. On June 16, the court entered its findings of facts and conclusions of law and ordered Watonwan to comply with the contract for the balance of its term. Judgment was entered accordingly on June 21. On June 29, KAAL moved for amended findings to provide for an award of attorneys' fees. On July 2, Watonwan filed a notice of appeal from the June 21 judgment. Because of the appeal, the trial court ruled that it lacked jurisdiction over the pending motion. On July 18, KAAL filed a notice of appeal from the June 21 judgment as to the denial of attorneys' fees and punitive damages. We affirm as to both appeals.

The Minnesota-Iowa Television Company ("KAAL") owns and operates KAAL-TV in Austin, Minnesota. Watonwan is a nonprofit organization which operates a translator station in Watonwan County, Minnesota. A translator station is essentially an antenna which picks up and rebroadcasts stations which cannot be otherwise received by individuals in the locality.

On July 1, 1975, KAAL entered into a contract with Watonwan for Watonwan to carry the station's signal on its equipment. A provision of the contract provided that Watonwan would not carry any signal which duplicated KAAL's network programming. The provision did not preclude any station from being carried, but only the network programming of any station which would duplicate KAAL; local programming would be permitted.

At all relevant times, KAAL has been affiliated with the ABC television network. At the time the contract was entered into, Watonwan was also carrying the signal of KSTP-TV from St. Paul. At that time KSTP was affiliated with NBC, but on March 5, 1979, KSTP changed affiliation to ABC.

Watonwan initially decided to comply with the contract and drop KSTP's signal. However, after hearing from both KSTP and KAAL, it decided to put KSTP back on its system. Watonwan feared it would be sued by one side no matter what it decided. KAAL would not indemnify it against KSTP, but KSTP offered to indemnify it against KAAL. Watonwan and KSTP then entered into an indemnification agreement and KSTP was put back on the air.

KAAL thereafter brought this suit against Watonwan to enforce the non-duplication provision. It claims, essentially, that duplication of ABC programming in Watonwan County will cause it to lose part of its audience. It claims that the loss of audience will harm its ability to sell advertising time, which is the heart of its income. Watonwan claims that KAAL will not lose enough of an audience to affect its advertising rates. It also claims the contract provision is invalid under antitrust laws. Because the antitrust claim and the validity of the trial court's findings as to the harm KAAL will suffer are both issues raised on appeal, a detailed statement of facts on those issues will be postponed until those issues are considered below.

The issues presented in this case are:

I. Should the FCC be allowed to rule on the validity of the non-duplication provision under its rules and policies before a Minnesota court passes on the validity of it under state law, and does the injunction in this case violate federal law?

II. Is the antitrust claim barred by the statute of limitations, laches, or unclean hands?

III. Does the non-duplication provision violate the Minnesota Antitrust Law?

IV. Were the trial court's findings with regard to the injunction clearly erroneous?

V. In addition to the injunction, is KAAL entitled to an award of:

A. Punitive damages?

B. Attorneys\' fees?

I. The first question in this case is whether this court should proceed to a resolution of this case or whether it should defer ruling until the FCC has an opportunity to rule on the validity of the contract provision in dispute. This question is involved in two separate areas: (1) with regard to the antitrust questions; and (2) with regard to the FCC's general policies governing translator stations and/or non-duplication provisions.

Watonwan claims that the FCC has "primary jurisdiction" over this case. The "primary jurisdiction" doctrine provides that "in cases raising issues of fact not within the conventional experience of judges or cases requiring the exercise of administrative discretion, agencies created * * * for regulating the subject matter should not be passed over." Far East Conference v. United States, 342 U.S. 570, 574, 72 S.Ct. 492, 494, 96 L.Ed. 576 (1952), quoted in State, by Pollution Control Agency v. United States Steel Corp., 307 Minn. 374, 380, 240 N.W.2d 316, 319 (1976). "Court jurisdiction is not thereby ousted, but only postponed." United States v. Philadelphia National Bank, 374 U.S. 321, 353, 83 S.Ct. 1715, 1736, 10 L.Ed.2d 915 (1963).

With regard to the antitrust issues involved here, the court is not required to allow the FCC to pass on them first. The U. S. Supreme Court in United States v. Radio Corporation of America, 358 U.S. 334, 79 S.Ct. 457, 3 L.Ed.2d 354 (1959), held that the FCC does not have regulatory authority in the antitrust field such as to insulate actions approved by the FCC from an antitrust action brought by the United States. The court, therefore, held that the FCC does not have primary jurisdiction in the antitrust area.

With regard to the validity of the contract provision under the FCC's own rules and policies, the primary jurisdiction doctrine does not require this court to await the agency's decision because the FCC and this court are not being asked to rule on the same question. This court is not asked to rule on the validity of the contract provision under the FCC's rules and policies, but rather on the validity of the provision under state law. Thus, there is no question requiring us to defer jurisdiction to that agency.

However, we must also consider whether we should await the FCC decision, either as a matter of convenience or as a matter of comity. In determining whether this court should await the agency's decision, there are at least two relevant factors: (1) how long a delay would result; and (2) the likelihood that the FCC will invalidate the contract provision. The parties state that there is no way to estimate the time delay which might be involved. However, on the second point, the Chief of the Broadcast Bureau of the FCC has already denied Watonwan's petition. The Chief stated:

The petitioner does not direct us to any Commission rule that prohibits the type of nonduplication protection required by the subject contract provision, and we know of none. * * *

Likewise, as to existing Commission policy, we have not been directed to any cases which specifically involve the propriety of voluntary nonduplication protection agreements between translators and their primary stations, and we know of none.

Watonwan has appealed that ruling to the full commission and, in light of the Chief's letter, is apparently asking the commission to adopt a new policy prohibiting such agreements. In light of the preliminary ruling by the Chief of the Broadcast Bureau and due to the fact that an early decision is unlikely, we decline to defer a decision by this court.

Watonwan argues that the injunction is invalid because it "modifies" its FCC license which only the FCC has the authority to do. This is not a valid objection to the injunction because the injunction does not actually modify the license at all. It does not change any of the actual terms of the license, such as the name of the licensee, the effective date, the channels, or any other term.

Watonwan states that KSTP is its "primary station" but does not indicate how that fact is of any significance. The FCC rules on translator stations define a primary station as "the television broadcast station which provides the programs and signals being retransmitted by a television broadcast translator station." 47 C.F.R. § 74.701(b) (1979). Under this definition, KAAL and any other station being rebroadcast by Watonwan would be primary stations also. The definition only distinguishes the translator station from the station which is the originator of the programming. It does not specify that there can only be one or that the translator must carry any portion of its programs. Also, as KAAL notes, the license permits, but does not require, Watonwan to carry the signal of KSTP.

Watonwan also argues that the injunction enjoins the broadcasting of programming which Watonwan has a FCC license to...