Playboy Entertainment Group, Inc. v. U.S.

• Decision Date: 08 November 1996
• Docket Number: Civil Action No. 96-94.,Civil Action No. 96-107-JJF.
• Parties: PLAYBOY ENTERTAINMENT GROUP, INC., and Graff-Pay-Per-View Inc., Plaintiffs v. UNITED STATES of America, United States Department of Justice Janet Reno, Attorney General, and the Federal Communications Commission, Defendants.
• Court: United States State Supreme Court of Delaware

945 F.Supp. 772

PLAYBOY ENTERTAINMENT GROUP, INC., and Graff-Pay-Per-View Inc., Plaintiffs v. UNITED STATES of America, United States Department of Justice Janet Reno, Attorney General, and the Federal Communications Commission, Defendants.

Civil Action No. 96-94.

Civil Action No. 96-107-JJF.

United States District Court, D. Delaware.

November 8, 1996.

A. Gilchrist Sparks, III, and Katharine R. Witherspoon, of Morris, Nichols, Arsht & Tunnell, Wilmington, DE (Burton Joseph, of Barsy, Joseph & Lichtenstein, Chicago, IL, Robert Corn-Revere, Jean S. Moore, Ronald J. Wiltsie, II, of Hogan & Hartson L.L.P., Washington, DC), for Plaintiff, Playboy Entertainment Group, Inc.

William D. Johnston, and John W. Shaw, of Young, Conaway, Stargatt & Taylor, Wilmington, DE (Charles S. Sims, and John Siegal, of Proskauer Rose Goetz & Mendelsohn LLP, New York City, Daniel Barsky, Graff Pay-Per-View Inc., New York City), for Plaintiff, Graff Pay-Per-View Inc.

Gregory M. Sleet, United States Attorney, Patricia Hannigan, Assistant U.S. Attorney, John J. Polk, Assistant U.S. Attorney, Wilmington, DE; Frank W. Hunger, Assistant Attorney General, Dennis G. Linger, Theodore C. Hirt, James J. Gilligan, Joseph V. Jest, and Sarah L. Wilson, of the United States Department of Justice, Civil Division, Federal Programs Branch, Washington, DC; (Daniel M. Armstrong, Associate General Counsel, Susan Fox, Office of the General Counsel, Federal Communications Commission), for Defendants.

Robert J. Katzenstein, of Smith, Katzenstein & Furlow, Wilmington, DE (Michael A. Bamberger, and Margaret A. Jacobs, of Sonnenschein Nath & Rosenthal, New York City), for Amici Curiae, American Booksellers Foundation for Free Expression, Association of American Publishers, Counsel for Periodical Distributors of The Americas, Feminists for Free Expression, Freedom to Read Foundation, Interactive Digital Software Association, International Periodical Distributors Association, Motion Picture Association of America, Inc., National Association of College Stores, Inc., National Association of Recording Merchandisers, Periodical and Book Association of America, Inc., Publishers Marketing Association, of America, Inc., and Video Software Dealers Association.

Henry N. Herndon, Jr., and Eric D. Schwartz, of Morris, James, Hitchens &amp Williams, Wilmington, DE (Patrick D. Maines, of The Media Institute, Washington, DC; Robert M. O'Neill, and Joshua Wheeler, of The Thomas Jefferson Center for Protection of Free Expression, Charlottesville, VA), for Amici Curiae, Thomas Jefferson Center for The Protection of Free Expression and The Media Institute.

Before: ROTH¹, Circuit Judge, FARNAN² and SIMANDLE³, District Judges.

OPINION

ROTH, Circuit Judge:

The plaintiffs in this action, Playboy Entertainment Group, Inc. ("Playboy") and Graff Pay-Per-View ("Graff"), challenge the constitutionality of section 505 of the Communications Decency Act of 1996 ("the CDA" of "the Act"), which is Title V of the Telecommunications Act of 1996, Pub.L. No. 104-104, 110 Stat. 56. Congress enacted section 505 in an effort to eliminate signal bleed, i.e., the partial reception of sexually explicit adult cable television programming in the homes of non-subscribers to that programming.

Most cable television systems in the United States offer one or more optional premium channels dedicated to sexually oriented programming. However, of the 62 million households that subscribe to cable television, only about 3 million will purchase or subscribe to adult programming during the course of a year. Cable system operators attempt to block non-subscribers from receiving this programming by various scrambling techniques which we will explain in greater detail in our Findings of Fact. Signal bleed occurs when the scrambling process is not fully successful.

The stated purpose of section 505 is to protect children from signal bleed. Section 505(a) requires a cable television operator to completely scramble or block the video and audio portions of any cable channel that is primarily dedicated to sexually explicit programming. If a cable operator is unable to comply in full with section 505(a), then section 505(b) requires "time channeling", i.e., that sexually explicit adult programming be transmitted only during those hours when children are not likely to view it. The Federal Communications Commission has determined these "safe harbor" hours to be from 10:00 p.m. to 6:00 a.m.

The principal issue facing us is whether government regulation of signal bleed from sexually explicit programming offends the free speech and equal protection rights of adult-programming networks and of their subscriber audience. Our analysis is narrowed by the fact that plaintiffs do not contend that signal bleed itself is protected speech. Moreover, plaintiffs concede that their programming is essentially 100% sexually oriented, in contrast to other entertainment channels that display only occasional or sporadic sexually explicit scenes or programs. Nevertheless, because the regulatory scheme of section 505 impacts on the transmission of adult programming, which is entitled to First Amendment protection,⁴ we will examine whether section 505 is a content-based restriction of speech, and, if so, whether it survives scrutiny by addressing a compelling interest and by being narrowly tailored for that end. We will also consider whether Congress has unconstitutionally singled out networks that are exclusively dedicated to sexually oriented programming while not regulating signal bleed from other premium networks that at times will transmit sexually oriented programs or scenes. Finally, we will examine plaintiffs' claim that the language of section 505 is unconstitutionally vague.

I. PROCEDURAL BACKGROUND

President Clinton signed the CDA into law on February 8, 1996. On February 26, Playboy filed this action in the United States District Court for the District of Delaware, seeking a declaratory judgment that § 505 violates the First Amendment and the Equal Protection Clause of the Fifth Amendment of the U.S. Constitution. In addition, Playboy sought injunctive relief that would prohibit enforcement of § 505 by the Government.⁵ Graff subsequently filed an action seeking identical relief against the same defendants. On March 4, 1996, Judge Farnan granted Graff's motion to consolidate these actions pursuant to Federal Rule of Civil Procedure 42(a). That same day, Chief Judge Dolores K. Sloviter of the United States Court of Appeals for the Third Circuit granted the parties' request to appoint a three-judge district court pursuant to § 561(a) of the CDA. She named Judge Joseph P. Farnan of the U.S. District Court for the District of Delaware, Judge Jerome B. Simandle of the U.S. District Court for the District of New Jersey, and Judge Jane R. Roth of the U.S. Court of Appeals for the Third Circuit.⁶

Because the CDA was to go into effect on March 9, 1996,⁷ Playboy requested a temporary restraining order ("TRO") to enjoin implementation and enforcement of § 505 of the Act. On March 6, 1996, Judge Farnan heard oral argument on Playboy's TRO motion.⁸ He granted Playboy's motion on March 7, 1996, temporarily enjoining enforcement of § 505 until the matter could be heard by the three judge panel appointed by Chief Judge Sloviter. Playboy Entertainment Group, Inc. v. United States, 918 F.Supp. 813 (D.Del.1996).

In preparation for our consideration of the plaintiffs' Application for a Preliminary Injunction, the parties negotiated a mutually acceptable discovery and briefing schedule. Much of the factual and technical evidence was presented by affidavits and briefs submitted prior to the preliminary injunction hearing. We heard testimony on May 20 and May 21, 1996, and closing arguments were presented on May 22. We concluded that we should delay our decision until after the Supreme Court's decision in Alliance for Community Media v. F.C.C., 56 F.3d 105 (D.C.Cir.1995). The Supreme Court published its decision on June 28, 1996, sub nom., Denver Area Educational Telecommunications Consortium v. F.C.C., ___ U.S. ___, 116 S.Ct. 2374, 135 L.Ed.2d 888 (1996). The parties then submitted supplemental memoranda, as we had instructed, on the impact and applicability of the Supreme Court's decision.

II. FINDINGS OF FACT

In order to understand fully the arguments made by the parties in this case, it is necessary to understand the technological workings of cable signals and transmission. During the preliminary injunction hearing, the court heard extensive and complex testimony regarding cable technology and the mechanisms available to comply with § 505. Pursuant to Federal Rule of Civil Procedure 52(a), we make the following findings of fact:

The Statute At Issue

1. Playboy and Graff challenge § 505 of the CDA, entitled "Scrambling of Sexually Explicit Adult Video Service Programming." This section requires a multisystem operator ("MSO")⁹ to scramble "sexually explicit adult programming or other programming that is indecent" which is transmitted on a channel "primarily dedicated to sexually oriented programming." Section 505 requires that any such adult channel or network be fully scrambled. The purpose of this scrambling is to eliminate "signal bleed." "Signal bleed" is the partial reception of video images and/or audio sounds on a scrambled channel. If an MSO does not or cannot comply with § 505's blocking requirement, the MSO is prohibited from transmitting the adult programming during hours of the day when minors are most likely to view it.¹⁰

2. MSOs, such as Telecommunication, Inc. ("TCI") and Time Warner Cable, provide cable subscribers with various packages of cable channels for which subscribers pay a monthly fee. Some subscribers receive a "basic" package or "tier" of channels. A basic cable tier often includes local broadcast networks (like ABC, CBS, and NBC), leased and public access channels, as well as networks devoted entirely to news,...