Huddy v. Federal Communications Commission

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 5, 2000 Decided January 19, 2001

No. 00-1089

John D. Huddy,
Appellant

v.

Federal Communications Commission,
Appellee

Biltmore Broadcasting, LLC,
Intervenor

Appeal of an Order of the
Federal Communications Commission

Gene A. Bechtel argued the cause and filed the briefs for
appellant.

Roberta L. Cook, Counsel, Federal Communications Com-
mission, argued the cause for appellee. With her on the brief
were Christopher J. Wright, General Counsel, and Daniel M.

Armstrong, Associate General Counsel. Gregory M. Christo-
pher, Counsel, entered an appearance.

Daniel E. Troy argued the cause for intervenor Biltmore
Broadcasting, LLC. With him on the brief were Richard J.
Bodorff and E. Joseph Knoll III.

Before: Williams, Ginsburg and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Williams.

Williams, Circuit Judge: John D. Huddy petitions for
review of a Federal Communications Commission decision
denying his request for a hearing on his challenges to the
assignment of a television broadcast license. We dismiss for
lack of standing.

Huddy is the sole shareholder of Riklis Broadcasting Cor-
poration, the former owner and licensee of TV station KADY.
In July 1996 Riklis entered involuntary bankruptcy and a
trustee was appointed to manage the corporation's estate.
The FCC consented to an involuntary transfer of the KADY
license to the trustee, who proceeded to auction off the
station. John Cobb emerged as the highest bidder. On the
trustee's endorsement of his creditworthiness, the bankruptcy
court approved the sale. Cobb assigned his purchase rights
to Biltmore Broadcasting, of which he is the controlling
principal.

In November 1997 Biltmore applied for FCC approval of
assignment of the license. Huddy filed a petition asking for a
hearing, claiming that Cobb had falsely certified his financial
qualifications to the FCC. In support, he asserted that in a
phone conversation Cobb had said that he hadn't yet secured
funding for the purchase. Cobb responded that Huddy mis-
understood his remarks and that he told Huddy only that he
had not chosen which of various means of financing he would
use. Cobb also struck back, alleging that during the same
call Huddy threatened to oppose Cobb's license application
unless the latter assisted Huddy in his claims against the
Riklis bankruptcy estate. Huddy later added a charge that
Cobb had assumed control of KADY before FCC approval of
the transfer, in violation of Commission rules. The trustee

answered with an affidavit saying that in the relevant period
he (the trustee) had controlled all business decisions at
KADY.

The FCC ultimately approved the assignment, and on July
1, 1998 the purchase of the television station was consummat-
ed. After twice petitioning the FCC to rethink its decision
and each time being rebuffed, Huddy sought review here.

To be heard on the merits Huddy must first satisfy the
three elements of constitutional standing: injury in fact,
causation, and redressability. See Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61 (1992). These elements rough-
ly correspond to the following questions: has Huddy asserted
a present or expected injury that is legally cognizable and
non-negligible, did the agency's actions materially increase
the probability of injury, and will the remedy sought compen-
sate Huddy or materially reduce the expected harm? To
satisfy these requirements Huddy asserts two interests--one
as a viewer of KADY and the other as a residual claimant of
the bankruptcy estate who would benefit financially if the
KADY license were returned to the trustee and re-auctioned.
We address each claim in turn.

As a resident of the service area and a viewer of the
station, Huddy can assert a possible injury to a legally
protected interest. Under our precedents listeners or view-
ers may serve as "spokesmen" for a station's entire audience.
See Office of Communication of the United Church of Christ
v. FCC, 359 F.2d 994, 1002 (D.C. Cir. 1966).

But Huddy's theory breaks down on causation. At best he
raises concerns about Cobb's integrity with respect to the
Commission's rules regarding future licensees' behavior in
financial matters and to pre-acquisition station control. But
he makes no effort to link these business behavior issues with
plausible predictions about Cobb's likely programming deci-
sions. To be sure, in the interests of "preserv[ing] the
integrity" of its operations, FCC v. WOKO, Inc., 329 U.S. 223,
228 (1946); see also id. at 226 (noting Commission authority
under 47 U.S.C. s 312(a)), the Commission is entitled to
consider a would-be licensee's deceptive behavior as grounds

for rejecting an application, id., and even to make denial of a
license virtually automatic on evidence of intentional misrep-
resentations in license applications, see, e.g., In re Opal
Chadwell, Dorothy O. Schulze and Deborah Brigham, Blanco
Communications, Ltd., 2 FCC Rcd. 5502 at p 14 (1987).
Presumably the Commission adopts such sanctions in the
interests of good broadcasting--i.e., where it believes they
will have a sufficiently favorable effect on broadcasting, in the
long run, to justify the various costs of imposing them. But
the run may be long indeed. So the authority of the Commis-
sion to apply such sanctions doesn't ipso facto support an
inference that FCC underenforcement of financial integrity
policies is likely to cause the sort of "material impairment of
[a viewer's] hopes or expectations" that is needed to support
standing. Jaramillo v. FCC, 162 F.3d 675, 677 (D.C. Cir.
1998).

Indeed, we've already held that the Commission's failure to
inflict pecuniary penalties on a licensee for an isolated breach
of the Commission's program-related requirements does not
increase the probability of future violations enough to afford a
listener standing to insist that it pursue those penalties.
Branton v. FCC, 993 F.2d 906, 909 (D.C. Cir. 1993). Huddy's
claim is, of course, stronger in the sense that the relief sought
would knock out Cobb altogether. But it is weaker in that
Huddy shows no logical link between the FCC's overlooking
Cobb's alleged business misconduct and a materially in-
creased risk that KADY's programming will not advance the
public interest. Rather than offer some affirmative reason to
think that FCC neglect of Cobb's alleged improprieties mate-
rially increases the risks of harm to listeners, Huddy relies
only on the always available supposition that it just might. If
that were enough to show standing, listeners could always
challenge any underenforcement of any license-related provi-
sion of communications law. Jaramillo, 162 F.3d at 677.

Huddy's theory here is quite a stretch from prior cases
allowing listener standing. In United Church of Christ, for
instance, listeners sought denial of license renewal on the
ground that a TV licensee had failed to "give a fair and
balanced presentation of controversial issues, especially those

concerning Negroes," and thus violated the Fairness Doc-
trine, 359 F.2d at 998-99, 1000, a (now-defunct) Commission
policy expressly directed at broadcasting content. See Syra-
cuse Peace Council v. FCC, 867 F.2d 654 (D.C. Cir. 1989).
And in Llerandi v. FCC, 863 F.2d 79 (D.C. Cir. 1988),
listeners challenged FCC approval of a license assignment
that allegedly violated the Commission's (since-modified)
"duopoly" rule prohibiting common ownership of two stations
whose signals overlap, a rule aimed at enhancing "diversifica-
tion of viewpoints." Id. at 85. In these cases, FCC underen-
forcement of rules aimed at quality or diversity of program
content left a station in the control of a party that allegedly
violated such rules.

To bolster his claim Huddy argues that Cobb breached a
promise to add a news program to the KADY schedule. To
Huddy this is evidence that Cobb will not serve the public
interest. Had Cobb made such a promise in an effort to
induce favorable action by the Commission, we might agree.
But in fact Cobb made no such promise. He simply respond-
ed to Huddy's allegation that he had exercised premature
control, explaining that in his contacts with the KADY staff
he had sought to explore the possibility of launching a news-
cast after the FCC approved his application. Cobb made no
commitment to the FCC or to KADY viewers.

Huddy points out that Cobb had KADY's rating market
changed from Santa Barbara to Los Angeles in January 2000,
evidently to enable it to force cable companies in Los Angeles
to carry its signal. This change was possible only with the
approval of the Commission after it considered the effect on
local programming. See In re Comcast Cablevision of Santa
Maria, Inc., 13 FCC Rcd. 24,192 at p p 3, 14-17 (1998)
(applying standards specified in 47 U.S.C. s 534(h)(1)(C)).
Huddy alleges no illegality in that process. In any event, the
fact that the change originated with action by Cobb does
nothing to overcome Huddy's failure to offer evidence, or
even a theory, as to how an alleged lack of candor on financial
matters might increase the likelihood of market switches that
injure listeners.

 Huddy's second theory of standing begins with the observa-
tion that KADY is more valuable today than when Biltmore
purchased it. Here Huddy turns, surprisingly, to the very
fact previously invoked to show Cobb's programming treach-
ery, namely his securing Commission approval to shift
KADY's market to Los Angeles, with prospects of more
lucrative cable carriage. He also says that when the FCC
changed its "television duopoly rules" in August 1999 to allow
common ownership of more than one local commercial televi-
sion station in the same market, the value of stations in all big
markets jumped. In the Matter of Review of the Commis-
sion's Regulations Governing Television Broadcasting, 14
FCC Rcd. 12,903 (1999). Huddy argues that if this court
were to remand to the FCC for a hearing on Cobb's integrity,
and if the FCC were to revoke Biltmore's license, and if the
trustee were to re-auction KADY, Huddy would profit as a
residual claimant of the Riklis bankruptcy estate. Although
Huddy's counsel seemed to abandon this second theory of
standing at oral argument, we include a brief treatment to
dispel any belief that it might hold water.

First, the injury to Huddy is (at most) the result of Cobb's
alleged lack of candor only in a narrow "but for" sense.1 Yes,
had Cobb not acquired the station, he would not have been
able to switch KADY's market. And yes, had the FCC not
changed its rules since the bankruptcy sale, the station's
market value would not have benefited from the rule change.
But there is nothing inherent in the FCC's slack policing of
its rules on candor about financial resources or on when a
buyer may first exercise control, that tends to bring about the
kinds of increases in station value that Huddy asserts. See

__________
1 We say "at most" because even "but for" causation is ques-
tionable (apart from the issue discussed in the text below--whether
Commission rejection of Biltmore's application would have led to a
new auction). The FCC did not change its duopoly rules for
another 16 months after its approval of the transfer. Had its
decision been the other way, a new auction might well have been
completed before the rule change was made or the prospect of its
adoption apparent, and Huddy would not have garnered his wind-
fall.

Movitz v. First National Bank of Chicago, 148 F.3d 760, 762-
63 (7th Cir. 1998); see also United States v. Dyer, 216 F.3d
568, 570-71 (7th Cir. 2000). Huddy seems implicitly to
recognize the lack of any inherent tendency of the FCC's
alleged error to produce the alleged injury, identifying the
causal link simply as the passage of time since the FCC's
action, coupled with two fortuities, Cobb's strategic decision
and the Commission's rule change. Reply Br. at 6-7.

We question whether "but for" causation of this sort could
ever be sufficient to confer constitutional standing. Certainly
Huddy does not point to any standing decision that finds a
causal relation based on merely the passage of time and an
accompanying change of market conditions. And acceptance
of such "but for" causation would effectively enable parties to
secure constitutional standing purely at their own volition.
Suppose that two persons, without interests at stake in an
agency process, had bet a sum of money on its outcome. If
"but for" causation of the kind involved here were enough, the
party picking the losing side would satisfy the causation
prong, and, unless the wager were illegal, standing would
ensue. It seems improbable that the Court intends all its
learning on constitutional standing to be so readily evaded.

We need not finally decide whether such "but for" causa-
tion can ever be enough, as Huddy has not shown that the
supposed injury could be redressed. As his counsel conceded
at oral argument, the record says nothing on the conse-
quences of an FCC veto of the transfer to Cobb. For all we
know, the trustee in bankruptcy would then be required
simply to award KADY to the next highest bidder in the
original auction. As we have no reason to believe that Huddy
would even reap his desired windfall, he flunks the redressa-
bility criterion. Simon v. Eastern Kentucky Welfare Rights
Organization, 426 U.S. 26, 41-43 (1976); Branton v. FCC, 993
F.2d at 911.

As Huddy lacks standing, his petition for review is

Dismissed.