Biltmore Forest Broadcasting Fm, Inc. v. United States

United States Court of Appeals for the Federal Circuit
2008-5055

BILTMORE FOREST BROADCASTING FM, INC.,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

Donald J. Evans, Fletcher, Heald & Hildreth, PLC, of Arlington, Virginia, argued
for plaintiff-appellant. Of counsel was Raymond J. Quianzon.

Anuj Vohra, Trial Attorney, Commercial Litigation Branch, Civil Division, United
States Department of Justice, of Washington, DC, for argued defendant-appellee. With
him on the brief were Gregory G. Katsas, Assistant Attorney General, Jeanne E.
Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel was Marla
T. Conneely, Trial Attorney. Of counsel on the brief was C. Grey Pash, Jr., Attorney,
Office of the General Counsel, Federal Communications Commission, of Washington,
DC.

Appealed from: United States Court of Federal Claims

Senior Judge James F. Merow
 United States Court of Appeals for the Federal Circuit

2008-5055

BILTMORE FOREST BROADCASTING FM, INC.,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

Appeal from the United States Court of Federal Claims in 07-CV-316, Senior Judge
James F. Merow.
___________________________

DECIDED: February 10, 2009
___________________________

Before BRYSON, PLAGER, and DYK, Circuit Judges.

DYK, Circuit Judge.

Biltmore Forest Broadcasting FM, Inc. (“Biltmore”) brought suit under the Tucker

Act, alleging that the Federal Communications Commission (“FCC” or “Commission”)

breached an implied-in-fact contract that arose as the result of an auction for an FM

broadcast license. The FCC allegedly breached the contract by violating the rules

relating to the auction. The Court of Federal Claims granted the United States’s motion

to dismiss for lack of subject-matter jurisdiction. Biltmore Forest Broad. FM, Inc. v.

United States, 80 Fed. Cl. 322 (2008) (“Biltmore II”). We affirm, and hold that the

District of Columbia Circuit has exclusive jurisdiction to determine the alleged rules

violation.
 BACKGROUND

The following description is based on the complaint filed by Biltmore and the

undisputed facts. For simplicity we confine this description to issues pertinent to this

appeal.

Biltmore participated in an FCC auction for a broadcast license in Biltmore

Forest, North Carolina. As part of the implementation of its mission to achieve

diversification of ownership, FCC rules limit the “cognizable interest in licenses” that one

person or single entity is allowed to control. See 47 C.F.R. § 73.3555. The FCC

requires submission of a family media certification to determine the extent to which

media interests owned by immediate family members are “subject to common influence

or control.” See Clarification of Commission Policies Regarding Spousal Attribution, 7

F.C.C.R. 1920, 1922-23 (1992). “Under existing policy, applicants for new construction

permits and for transfers or assignments of licenses are required to report the broadcast

interests of all immediate family members (parents, siblings and offspring, as well as

spouses) of any party to the application.” Id. at 1922. “In addition, applicants must file

exhibits to these applications, which provide full disclosure regarding the nature and

extent of such familial interests.” Id.

The FCC’s rules themselves do not specify at which stage in the proceedings the

required certification must be submitted. However, the Public Notice for this license

auction addressed the question. Biltmore II, 80 Fed. Cl. at 323 (citing Notice and Filing

Requirements for Auction of AM, FM, TV, LPTV, and FM and TV Translator

Construction Permits Scheduled for September 28, 1999, 14 F.C.C.R. 10,632, 10,641

(1999) (hereinafter “Public Notice”)). The official Public Notice announcing the auction

2008-5055 2
required, as part of the application, submission of a certification of media interests held

by family members, stating that “all applicants must provide the information set forth in

this section.” 14 F.C.C.R. at 10,641 (emphasis omitted). The Public Notice also stated

that “[b]idders must certify . . . compliance with the Commission’s policies relating to

media interests of immediate family members.” Id. One of the instructions warned that

“[f]ailure to submit required information by the resubmission date will result in dismissal

of the application and inability to participate in the auction.” Id. at 10,697 (emphasis

omitted).

Ultimately, Liberty Productions, L.P. (“Liberty”) was the highest bidder and

Biltmore was the second highest bidder. Biltmore II, 80 Fed. Cl. at 324. Unlike

Biltmore, Liberty did not file a family media certification prior to the auction. Id. at 323.

However, Liberty filed its family media certification within a month of the auction’s

conclusion. Id. at 324.

Prior to the conclusion of an auction, bidder-applicants are precluded from

contesting the ability of other bidder-applicants to participate in that auction. Id. at 323-

24. “[T]he Commission concluded that the fairer and more expeditious approach would

be to resolve any outstanding [qualification] issues after the auction.” Implementation of

Section 309(j) of the Communications Act, 14 F.C.C.R. 8724, 8731 (1999); see also id.

at 8732 (“We deny reconsideration of our determination to defer until after the auction

basic qualifications issues . . . .”).

After the auction’s conclusion, in administrative proceedings before the FCC,

Biltmore argued that Liberty should have been disqualified for failure to submit a timely

family media certification and that the license should have been awarded to Biltmore as

2008-5055 3
the next highest bidder. Biltmore Forest Broad. FM, Inc. v. FCC, 321 F.3d 155, 159

(D.C. Cir. 2003) (“Biltmore I”). Biltmore noted that § 73.5002(b) of the FCC’s

regulations provides that “[t]o participate in . . . [an] auction[ ], all applicants must timely

submit short-form applications [ ], along with all required certifications, information and

exhibits, pursuant to the provisions of Section 1.2105(a) and any Commission public

notices.” Pl.-Appellant’s Final Br., Biltmore I, No. 01-1392, at 5 (D.C. Cir. July 18, 2002)

(emphases in brief). The Public Notice stated that all applicants “must” provide the

family media certification and that “[f]ailure to submit required information by the

resubmission date will result in dismissal of the application and inability to participate in

the auction.” 14 F.C.C.R. at 10,697 (emphasis omitted).

Biltmore argued, moreover, that § 1.2105(b)(1) of the FCC’s rules also required

disqualification. That provision stated “Any short-form application . . . that does not

contain all of the certifications required pursuant to this section is unacceptable for filing

and cannot be corrected subsequent to the applicable filing deadline. The application

will be dismissed with prejudice and the upfront payment, if paid, will be returned.” 47

C.F.R. § 1.2105(b)(1). 1 Biltmore’s theory was, thus, that the Public Notice together with

1
Section 1.2105(b) states, inter alia:
(1) Any short-form application (FCC Form 175) that does not contain all of
the certifications required pursuant to this section is unacceptable for filing
and cannot be corrected subsequent to the applicable filing deadline. The
application will be dismissed with prejudice and the upfront payment, if
paid, will be returned.
(2) The Commission will provide bidders a limited opportunity to cure
defects specified herein (except for failure to sign the application and to
make certifications) and to resubmit a corrected application. During the
resubmission period for curing defects, a short-form application may be
amended or modified to cure defects identified by the Commission or to
make minor amendments or modifications. After the resubmission period
has ended, a short-form application may be amended or modified to make

2008-5055 4
the FCC’s rules required that Liberty submit a family ownership certification together

with its original application and that the FCC could not allow this defect to be cured after

the completion of the bidding process. In re Liberty Prods., L.P., 16 F.C.C.R. 12,061,

12,068 (adopted April 12, 2001, released May 25, 2001). Biltmore did not raise a

contract claim to the FCC.

In a Memorandum Opinion and Order adopted on April 12, 2001, the FCC held

that Liberty was not disqualified due to the late submission of the family ownership

certification, granted Liberty’s application for a construction permit, and dismissed

Biltmore’s mutually exclusive application. Id. at 12,068-71, 12,095. The FCC first

addressed whether § 1.2105(b) of its rules required disqualification. Id. at 12,068. The

FCC found that “the [FCC] rules do not expressly provide that a short-form application

omitting this particular certification is unacceptable for filing and will be dismissed with

prejudice (i.e., with no opportunity to supply the missing certification after the short-form

filing deadline.).” Id. The FCC concluded that “Section 1.2105(b) [of the rules] requires

the dismissal with prejudice, without the opportunity to correct after the applicable filing

deadline, only of” a narrow category of information. Id. The family ownership

certification does not fall into that narrow category. Id. at 12,068-69. The FCC also

minor changes or correct minor errors in the application. Major
amendments cannot be made to a short-form application after the initial
filing deadline. Major amendments include changes in ownership of the
applicant that would constitute an assignment or transfer of control,
changes in an applicant’s size which would affect eligibility for designated
entity provisions, and changes in the license service areas identified on
the short-form application on which the applicant intends to bid. Minor
amendments include, but are not limited to, the correction of typographical
errors and other minor defects not identified as major. An application will
be considered to be newly filed if it is amended by a major amendment
and may not be resubmitted after applicable filing deadlines.

2008-5055 5
concluded that 47 C.F.R. § 73.5002(b) does not require disqualification. Even though

§ 73.5002(b) provides that applicants must comply with “any Commission public

notices” in order to participate in an auction, it does not provide notice that the omission

of a family media certification “will result in the dismissal of the short-form application

with no opportunity to amend.” Id. at 12,069. In addition, the Public Notice “does not

expressly state that the omission of this particular certification . . . will render the short-

form application defective . . . , such that it cannot later be amended.” Id. at 12,069.

Rather, it is merely a “general admonishment” which “echoes the general requirements

applicable to all short-form information.” Id. at 12,069. “Fairness demands explicit

notice for a severe sanction, such as the dismissal of an application.” Id. at 12,070.

This Public Notice “does not provide sufficient notice that a short-form application not

containing the familial certification must be dismissed.” Id.

Biltmore appealed the FCC’s licensing decision to the District of Columbia Circuit,

pursuant to 47 U.S.C. § 402(b)(1), (5), & (6). Biltmore II, 80 Fed. Cl. at 324. Biltmore

argued that Liberty should have been disqualified. Biltmore urged that the FCC’s

interpretation conflicted with the plain language of its rules, and that, even if the rules

were ambiguous, the FCC’s interpretation should not be given deference because the

FCC stood to gain monetarily by the interpretation.

The District of Columbia Circuit affirmed the FCC’s award of the license to

Liberty. Biltmore I, 321 F.3d at 160, 165. The court held that the FCC was correct that

a family certification is not one of the specifically required documents under 47 C.F.R.

§ 1.2105(b)(1), which would require immediate disqualification without an opportunity to

amend. Id. at 160-61. Deferring to the agency’s interpretation, which was controlling

2008-5055 6
“unless . . . plainly erroneous or inconsistent with the regulation,” the court held that the

FCC did not act unreasonably in determining that neither its rules nor the Public Notice

required the dismissal of Liberty’s application for failure to timely file a family media

certification. Id. The court stated that the FCC “need not . . . disqualify Liberty after the

auction on the basis of an omission that, according to the [Public Notice], would

disqualify an applicant if discovered prior to the auction.” Id. at 161. “Because the

family certification was not required by § 1.2105, the omission could be cured.” Id.

Biltmore’s subsequent petition for certiorari to review the District of Columbia

Circuit’s decision was denied. Biltmore Forest Broad. FM, Inc. v. FCC, 540 U.S. 981

(2003).

Biltmore then filed the present damages action in the Court of Federal Claims,

urging that the FCC breached an implied-in-fact contract when it granted a broadcast

license in violation of the published terms for the auction. 2 Biltmore II, 80 Fed. Cl. at

322-23. Biltmore’s complaint presented to the Court of Federal Claims was identical to

Biltmore’s first-listed issue presented for review by the District of Columbia Circuit:

1. The FCC issued a Public Notice establishing mandatory
preauction requirements for participation in an action for broadcast
licenses. The winner of the auction did not comply with one of these
prerequisites. Other bidders had recognized that the bidder’s application
was defective and placed their bids accordingly. Could the FCC excuse
the winning bidder’s non-compliance after the auction and declare it the
winner?

Id. at 324-25. The Court of Federal Claims granted the United States’s motion to

dismiss for lack of subject-matter jurisdiction largely based on our decision in Folden v.

2
Biltmore alternatively characterized the issue as a taking in violation of the
Fifth Amendment, but admitted at oral argument that the complaint does not allege a
takings claim.

2008-5055 7
United States, 379 F.3d 1344 (Fed. Cir. 2004), discussed below. In the alternative, the

court also held that either Biltmore’s claims were barred by claim preclusion or

Biltmore’s claims for monetary relief were limited to bid preparation and proposal costs.

Biltmore II, 80 Fed. Cl. at 336.

Biltmore timely appealed. On April 30, 2008, Biltmore filed a petition with this

court requesting an initial hearing en banc and reconsideration of Folden. That petition

was denied on June 17, 2008, and Biltmore’s appeal was heard by a panel of this court.

We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1295(a)(3).

DISCUSSION

We review whether the Court of Federal Claims possesses subject-matter

jurisdiction de novo. See Fisher v. United States, 402 F.3d 1167, 1173 (Fed. Cir. 2005)

(en banc in relevant part).

The Tucker Act of 1887 grants the Court of Federal Claims jurisdiction over, inter

alia, “[a]ny claim against the United States founded . . . upon any express or implied

contract with the United States.” 28 U.S.C. § 1491(a)(1). The elements of an implied-

in-fact contract are: “(1) mutuality of intent to contract; (2) consideration; (3) an

unambiguous offer and acceptance[;] and (4) ‘actual authority’ on the part of the

government’s representative to bind the government.” Schism v. United States, 316

F.3d 1259, 1278 (Fed. Cir. 2002) (en banc). In the past both the Supreme Court and

we have held that contract and takings claims, in such circumstances, can be founded

on regulatory actions by Congress or federal agencies. See, e.g., United States v.

Winstar Corp., 518 U.S. 839 (1996); Preseault v. Interstate Commerce Comm’n, 494 U.S.

2008-5055 8
1 (1989). The question here is whether the Court of Federal Claims has jurisdiction to

determine the existence of an alleged regulatory violation by the FCC.

Biltmore’s contractual theory is clear enough. Biltmore argues that Liberty should

have been disqualified and that, as a result, a contract exists between the FCC and

Biltmore, as the next highest bidder. Biltmore is correct that an auction can result in a

contract. “General principles of auction law provide a baseline rule that the close of an

auction—the fall of the hammer—signals acceptance of the offer and creates a binding

contract between the seller and the high bidder.” In re GWI PCS 1 Inc., 230 F.3d 788,

807 (5th Cir. 2000). 3

Biltmore contends that the FCC has a contractual obligation to grant a license to

the highest bidder at the close of an auction if that bidder fulfills the statutory eligibility

requirements. See In re Nextwave Pers. Commc’ns, Inc., 200 F.3d 43, 57, 60-61 (2d

Cir. 1999). Indeed, the FCC itself appears to recognize that its auctions result in a

contract. In re BDPCS, Inc., 15 F.C.C.R. 17,590, 17,599-600 (2000) (“The

announcement of the winning bidder in an auction conducted by the Commission, like

3
See also Erie Coal & Coke Corp. v. United States, 266 U.S. 518, 520
(1925) (“The terms and conditions of the [government’s auction] as set forth in the
advertisement [are] binding alike upon the United States and the bidders.”); Blossom v.
R.R. Co., 70 U.S. (3 Wall.) 196, 206 (1865) (“[A]s soon as the hammer is struck
down . . . the bargain is considered as concluded, and the seller has no right afterwards
to accept a higher bid nor the buyer to withdraw from the contract.”); Lawrence Paper
Co. v. Rosen & Co., 939 F.2d 376, 378-79 (6th Cir. 1991) (“The contract becomes
complete only when the bid is accepted, this being ordinarily denoted by the fall of a
hammer.”) (quoting 7 Am. Jur. 2d Auctions & Auctioneers § 16 (1980 & Supp. 1991));
Bottorff v. Ault, 374 F.2d 832, 835 (7th Cir. 1967) (“The sales here were at auction.
They were completed when the hammer fell or when the auctioneer said ‘sold.’”);
Barclay v. United States, 333 F.2d 847, 857 (Ct. Cl. 1964) (“After the date their bid was
accepted by the Department . . . , both parties were contractually bound to do business
with one another on the terms set out in the contract.”).

2008-5055 9
the acceptance of high bids in auctions in other settings, terminates the bidding and

establishes, as of the moment of the acceptance of the high bid, the binding obligation

to pay the winning bid price for the licenses.” (footnote omitted)). Curiously, on appeal

the government argues that “FCC licensing auctions are not commercial transactions

resulting in a contractual relationship between the FCC and the license awardee.”

Def.-Appellee’s Br. & Rule 30(f) App. at 7. Nonetheless, we assume for the purposes of

this appeal, without deciding, that an FCC license auction results in a contract between

the FCC and the high bidder. 4

Even under this assumption, this case hinges on whether the District of Columbia

Circuit has exclusive jurisdiction to determine whether the FCC complied with its own

rules in connection with the award of a construction license to Liberty and the denial of a

license to Biltmore under 47 U.S.C. § 402(b). Section 402(b) provides:

Appeals may be taken from decisions and orders of the Commission to
the United States Court of Appeals for the District of Columbia in any of
the following cases:
(1) By any applicant for a construction permit or station license,
whose application is denied by the Commission.
....
(5) By the holder of any construction permit or station license which
has been modified or revoked by the Commission.
(6) By any other person who is aggrieved or whose interests are
adversely affected by any order of the Commission granting or
denying any application described in paragraphs (1), (2), (3), (4),
and (9) of this subsection.

In interpreting an earlier version of § 402, the Supreme Court stated that an FCC

order denying an application for a license “was reviewable only by a direct

4
In one of its alternative holdings, the Court of Federal Claims analyzed the
facts under 28 U.S.C. § 1491 as an unsuccessful bidder scenario, and found that
damages were limited to bid preparation costs. Biltmore II, 80 Fed. Cl. at 334, 336. We
need not decide if this was correct given our disposition of the case.

2008-5055 10
appeal . . . under 47 U.S.C. § 402(b).” United States v. Storer Broad. Co., 351 U.S.

192, 208 (1956); see Scripps-Howard Radio, Inc. v. FCC, 316 U.S. 4, 8 (1942)

(“[O]rders granting or denying applications for construction permits or station

licenses . . . were made reviewable by the Court of Appeals for the District of

Columbia”). Recently, in Folden, we agreed and held that it has been long-settled that

§ 402(b) provides that the District of Columbia Circuit is the exclusive location for

judicial review of the FCC’s licensing decisions. Folden, 379 F.3d at 1356-57 (collecting

cases). Therefore, the Court of Federal Claims lacks subject-matter jurisdiction to

review the FCC’s denial of a construction permit. 5

Biltmore, however, asserts that it does not seek to overturn the FCC’s licensing

decision and does not now seek to secure the license. Biltmore points out that the

statute does not give the District of Columbia Circuit jurisdiction over implied-in-fact

contracts. Rather, exclusive jurisdiction to adjudicate disputes as to implied-in-fact

contracts rests with the Court of Federal Claims. What Biltmore ignores is that the

District of Columbia Circuit not only has exclusive jurisdiction to review the grant or

denial of FCC licenses, but also has exclusive jurisdiction to adjudicate the underlying

issue of FCC rules compliance necessary to the licensing decision. We decided this

exact issue in Folden.

5
Though the issue was not properly raised by Biltmore, Folden holds that a
takings claim is equally subject to the exclusive jurisdiction of the District of Columbia
Circuit. 379 F.3d at 1352, 1360. In any event, a takings claim cannot rest on an alleged
violation of the statute or regulation; instead, the analysis is predicated on an
assumption of the validity of the government action. Acadia Tech., Inc. v. United States,
458 F.3d 1327, 1331 (Fed. Cir. 2006).

2008-5055 11
 In Folden, the Court of Federal Claims plaintiffs sought to secure FCC cellular

licenses through lotteries, asserting that they had an implied-in-fact contract with the

FCC that obligated the FCC to hold lotteries for the licenses and that instead the FCC

had proposed to auction the licenses. 379 F.3d at 1346, 1353. The plaintiffs then sued

the FCC in the Court of Federal Claims for breach of an implied-in-fact contract, “takings

in violation of the Fifth Amendment, and unconstitutional takings of their contract rights

in violation of Article III of the U.S. Constitution.” Id. at 1352. The Court of Federal

Claims dismissed for lack of subject-matter jurisdiction under 47 U.S.C. § 402(b), and,

in the alternative, dismissed for failure to state a claim upon which relief could be

granted—due to lack of mutuality of intent to contract. Id. at 1352-54. On appeal, we

held that it is “clear that the D.C. Circuit’s jurisdiction over claims that fall within

subsection 402(b) is exclusive,” and that § 402 preempts the Court of Federal Claims’s

Tucker Act jurisdiction over the same subject matter. Id. at 1356-57. The Court of

Federal Claims thus lacked jurisdiction to adjudicate whether the FCC was obligated to

award the licenses by lottery because that issue was within the District of Columbia

Circuit’s exclusive jurisdiction over issues “ancillary” to FCC licensing decisions. Id. at

1360. This panel is bound by the holding in Folden.

At an earlier stage of this appeal, Biltmore argued that an initial en banc hearing

was appropriate because Folden governed this case. Pl.-Appellant’s Motion for Hearing

En Banc, Biltmore II, No. 2008-5055, at 1 (Fed. Cir. Apr. 30, 2008) (“Because a panel of

this Court ruled in [Folden] that the Court of Federal Claims has no jurisdiction over

contract-based claims against the FCC in the radio licensing context, any other panel of

this Court will presumably be bound by that determination, rendering an appeal to a

2008-5055 12
normal three-judge panel both futile and a waste of resources for all concerned.”).

However, Biltmore now argues that this court’s holding in Folden was dictum. Biltmore

notes that the Court of Federal Claims had originally decided the case underlying

Folden on alternative grounds, holding that (1) there was no subject-matter jurisdiction

because of the District of Columbia Circuit’s exclusive jurisdiction, and (2) that no

implied-in-fact contract existed. On appeal we addressed only the first ground, holding

that subject-matter jurisdiction was lacking. Biltmore argues that the holding by this

court in Folden—that the court lacked subject-matter jurisdiction—was somehow a

hypothetical exercise because the non-existence of a contract was not overturned on

appeal. This argument makes no sense. The panel in Folden did exactly what it was

supposed to do. It addressed the jurisdictional holding before addressing the merits.

Plains Commerce Bank v. Long Family Land & Cattle Co., 128 S. Ct. 2709, 2716

(2008). That jurisdictional holding was not dictum.

Biltmore also appears to suggest that this case is distinguishable from Folden

because the plaintiff in Folden failed to exhaust the available administrative remedies (at

the FCC with appeals to the District of Columbia Circuit), whereas here Biltmore fully

exhausted all administrative remedies. Biltmore argues that the District of Columbia

Circuit’s decision is not binding on the Court of Federal Claims because the that

decision gave deference to the agency’s interpretation of the auction regulations under

Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),

whereas the Court of Federal Claims would review the FCC’s action under a de novo

standard. Biltmore theorizes that the FCC’s alleged self-interest bars deference to the

FCC’s interpretation. We are not persuaded by this argument. First, Biltmore

2008-5055 13
unsuccessfully made a similar argument, that the FCC should not be given deference

due to its self-interest in the interpretation, to the District of Columbia Circuit and in its

petition for certiorari. Biltmore II, 80 Fed. Cl. at 326. The District of Columbia Circuit

rejected the self-interest argument. Biltmore is essentially asking us to re-adjudicate

this question and to create inconsistent results for the same question in this court and

the District of Columbia Circuit. Second, whether or not the precise issue was raised

before the District of Columbia Circuit, jurisdiction conferred by § 402(b) is exclusive.

There is no jurisdiction in the Court of Federal Claims to initially adjudicate or to re-

adjudicate the FCC’s compliance with its rules and regulations in licensing proceedings.

The District of Columbia Circuit’s jurisdiction over those issues is exclusive. We need

not decide in this case whether, if the District of Columbia Circuit had found a rules

violation, the Court of Federal Claims would have jurisdiction to consider an implied-in-

fact contract claim founded in the District of Columbia Circuit’s adjudicated rules

violation. Biltmore does not and could not here base a claim on the District of Columbia

Circuit’s decision.

In short, the District of Columbia Circuit has exclusive jurisdiction to adjudicate

alleged rules violations in FCC licensing proceedings. The Court of Federal Claims has

no subject-matter jurisdiction to re-adjudicate that issue.

AFFIRMED

COSTS

No costs.

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