Third Circuit Again Strikes Down FCC Fleeting Image Fine

In Fox, Cher and Nicole Richie uttered expletives during the Billboard Music Awards in 2002 and 2003. That was before the FCC's March 2004 decision in In re Complaints Against Various Broadcast Licensees Regarding Their Airing of the “Golden Globe Awards” Program, 19 F.C.C.R. 4975 (2004), in which it said it would then begin fining broadcasters for fleeting expletives, but declined to do so in the Golden Globes case because the company wasn't aware of the policy change at the time the awards aired. The Supreme Court upheld the FCC's decision to change its policy, finding the commission adequately explained its rationale.

Judge Rendell noted that the difference between Fox and CBS v. FCC was that the FCC admitted in Fox that it had broken new ground for sanctions by choosing not to fine Fox for the incident. The FCC chose to fine CBS even though the 2004 Super Bowl also came out before Golden Globes, Rendell wrote. Rendell said the Third Circuit's original decision tossing the fine therefore must be upheld unless the FCC could show the pre-Golden Globes policy of not sanctioning for fleeting material did not include fleeting images.

'Fleeting' Material

Rendell noted that the FCC and Scirica in his dissent argue that a small section in the background portion of Fox supports the argument that fleeting images were never given a safe harbor from sanctions. The FCC argued that images fall into the category of literal “descriptions or depictions” of sexual organs or functions. The commission said the Fox decision indicates the FCC's previous fleeting-material policy of no sanctions applied only to non-literal or expletive depictions and not to fleeting images, Rendell observed.

Rendell said the language in Fox cited to by the FCC and Scirica was simply background discussion of the FCC's historical approach and “is neither reasoning nor holding.” “Indeed,” she added, “the Fox court had no occasion to consider the application of the FCC's pre-Golden Globes fleeting-material policy to images, because that case involved the use of spoken fleeting expletives.”

The FCC had the opportunity in its 2004 decision in Young Broadcasting of San Francisco Inc., 19 F.C.C.R. 1751 (2004), issued just days before the Super Bowl, to say that its old fleeting-material policy did not apply to images given that case dealt with the fleeting image of a body part, Rendell said. Instead, the FCC argued that Young Broadcasting was an exception to the policy of not sanctioning for fleeting material. According to Rendell: “The commission's argument also rewrites history, marginalizing the Supreme Court's recognition in Fox that Golden Globes reflected a clear change in FCC's fleeting-material policy, and ignoring the agency's consistent practice ' over three decades before its order in this case ' of exempting all fleeting material, whether words or images, from enforcement under its indecency policy.”

After the Third Circuit majority examined the impact of Fox on its previous decision, it then looked again to the merits of the underlying argument. The Supreme Court vacated the Third Circuit's initial opinion in the case before remanding it back to the panel. Rendell said that while the appellate court would ordinarily just reinstate its old opinion after determining Fox had no impact, it could not do that here for two reasons. First, the Third Circuit was initially unanimous, but now had a dissenter in Scirica. Secondly, Rendell said, the new majority did not think the earlier opinion's discussion of the scienter required for a violation was necessary and the court declined to adopt that part of its old opinion.

The remaining 40 pages of the 69-page Third Circuit majority were simply a re-issuance of the initial appellate opinion, minus certain sections the new majority felt irrelevant.

In his 53-page dissent, Judge Scirica said he thought Fox “undermines the basis of our prior holding on the Administrative Procedure Act [APA].” Because of that, he said, he would hold that the FCC's imposition of sanctions was neither arbitrary nor capricious.

Scirica said the Fox decision required the Third Circuit to revise its previous holding in CBS that the FCC violated the APA by arbitrarily and capriciously changing its policy. “Based on the Supreme Court account of the history of the FCC's enforcement policy, we cannot adhere to our earlier determination that prior FCC policy had granted a per se exemption to all fleeting indecent material; instead, Fox compels the conclusion that the fleeting exemption was limited to a particular type of words,” Scirica found.

He said, however, that the FCC could not impose sanctions unless CBS acted with the requisite scienter. Because the FCC's sanctions rested on the wrong statutory provision, “and misapprehended the proper mens rea standard,” Scirica said he would vacate the sanctions and remand for further proceedings.

Robert Corn-Revere of Davis Wright Tremaine in Washington, DC, represented CBS along with Nancy Winkelman of Schnader Harrison Segal & Lewis in Philadelphia. Corn-Revere deferred comment to CBS, which said in a statement: “We are hopeful that this will help lead the FCC to return to the policy of restrained indecency enforcement it followed for decades.”

The FCC's associate general counsel, Jacob M. Lewis, argued the case on behalf of the commission. “We are pleased that the court did not question the FCC's statutory responsibility to regulate indecent broadcasting,” the FCC said in a statement. “While we are disappointed by the court of appeals' decision, we note that the court overturned the FCC's 2006 forfeiture order on narrow procedural grounds. In the meantime, the FCC will continue to use all of the authority at its disposal to ensure that the nation's broadcasters fulfill the public interest responsibilities that accompany their use of the public airwaves.”

Meanwhile, the U.S. Supreme Court is reconsidering FCC v. Fox Television Studios, out of the Second Circuit, on the First Amendment impact of the FCC's fleeting expletive rules.

The U.S. Circuit Court of Appeals for the Third Circuit again threw out a $550,000 fine against CBS Corp. for televising Janet Jackson's “wardrobe malfunction” during the 2004 Super Bowl halftime show. CBS Corp. v. Federal Communications Commission (FCC), 06-3575. The split appellate panel reviewed its previous decision after the U.S. Supreme Court remanded it in light of the High Court's ruling in the fleeting-expletive indecency case of FCC v. Fox Television Studios , 556 U.S. 502. While the Third Circuit was unanimous in its initial decision, the author of that first opinion ' Judge Anthony Scirica ' now dissented.

No Sufficient Notice

In writing for the new Third Circuit majority, Judge Marjorie O. Rendell found that nothing about Fox changed the appellate panel's initial analysis that the Federal Communications Commission's fining of CBS was done without sufficient notice that the FCC was changing its policy to allow for sanctions for fleeting expletives or indecent images. “As the Fox court observed and affirmed, the decision not to impose a fine in [the Fox] case signaled the FCC's understanding that imposing sanctions for conduct that occurred before the FCC's policy change was announced would raise due process concerns,” Judge Rendell wrote.

In Fox, Cher and Nicole Richie uttered expletives during the Billboard Music Awards in 2002 and 2003. That was before the FCC's March 2004 decision in In re Complaints Against Various Broadcast Licensees Regarding Their Airing of the “Golden Globe Awards” Program, 19 F.C.C.R. 4975 (2004), in which it said it would then begin fining broadcasters for fleeting expletives, but declined to do so in the Golden Globes case because the company wasn't aware of the policy change at the time the awards aired. The Supreme Court upheld the FCC's decision to change its policy, finding the commission adequately explained its rationale.

Judge Rendell noted that the difference between Fox and CBS v. FCC was that the FCC admitted in Fox that it had broken new ground for sanctions by choosing not to fine Fox for the incident. The FCC chose to fine CBS even though the 2004 Super Bowl also came out before Golden Globes, Rendell wrote. Rendell said the Third Circuit's original decision tossing the fine therefore must be upheld unless the FCC could show the pre-Golden Globes policy of not sanctioning for fleeting material did not include fleeting images.

'Fleeting' Material

Rendell noted that the FCC and Scirica in his dissent argue that a small section in the background portion of Fox supports the argument that fleeting images were never given a safe harbor from sanctions. The FCC argued that images fall into the category of literal “descriptions or depictions” of sexual organs or functions. The commission said the Fox decision indicates the FCC's previous fleeting-material policy of no sanctions applied only to non-literal or expletive depictions and not to fleeting images, Rendell observed.

Rendell said the language in Fox cited to by the FCC and Scirica was simply background discussion of the FCC's historical approach and “is neither reasoning nor holding.” “Indeed,” she added, “the Fox court had no occasion to consider the application of the FCC's pre-Golden Globes fleeting-material policy to images, because that case involved the use of spoken fleeting expletives.”

The FCC had the opportunity in its 2004 decision in Young Broadcasting of San Francisco Inc., 19 F.C.C.R. 1751 (2004), issued just days before the Super Bowl, to say that its old fleeting-material policy did not apply to images given that case dealt with the fleeting image of a body part, Rendell said. Instead, the FCC argued that Young Broadcasting was an exception to the policy of not sanctioning for fleeting material. According to Rendell: “The commission's argument also rewrites history, marginalizing the Supreme Court's recognition in Fox that Golden Globes reflected a clear change in FCC's fleeting-material policy, and ignoring the agency's consistent practice ' over three decades before its order in this case ' of exempting all fleeting material, whether words or images, from enforcement under its indecency policy.”

After the Third Circuit majority examined the impact of Fox on its previous decision, it then looked again to the merits of the underlying argument. The Supreme Court vacated the Third Circuit's initial opinion in the case before remanding it back to the panel. Rendell said that while the appellate court would ordinarily just reinstate its old opinion after determining Fox had no impact, it could not do that here for two reasons. First, the Third Circuit was initially unanimous, but now had a dissenter in Scirica. Secondly, Rendell said, the new majority did not think the earlier opinion's discussion of the scienter required for a violation was necessary and the court declined to adopt that part of its old opinion.

The remaining 40 pages of the 69-page Third Circuit majority were simply a re-issuance of the initial appellate opinion, minus certain sections the new majority felt irrelevant.

In his 53-page dissent, Judge Scirica said he thought Fox “undermines the basis of our prior holding on the Administrative Procedure Act [APA].” Because of that, he said, he would hold that the FCC's imposition of sanctions was neither arbitrary nor capricious.

Scirica said the Fox decision required the Third Circuit to revise its previous holding in CBS that the FCC violated the APA by arbitrarily and capriciously changing its policy. “Based on the Supreme Court account of the history of the FCC's enforcement policy, we cannot adhere to our earlier determination that prior FCC policy had granted a per se exemption to all fleeting indecent material; instead, Fox compels the conclusion that the fleeting exemption was limited to a particular type of words,” Scirica found.

He said, however, that the FCC could not impose sanctions unless CBS acted with the requisite scienter. Because the FCC's sanctions rested on the wrong statutory provision, “and misapprehended the proper mens rea standard,” Scirica said he would vacate the sanctions and remand for further proceedings.

Robert Corn-Revere of Davis Wright Tremaine in Washington, DC, represented CBS along with Nancy Winkelman of Schnader Harrison Segal & Lewis in Philadelphia. Corn-Revere deferred comment to CBS, which said in a statement: “We are hopeful that this will help lead the FCC to return to the policy of restrained indecency enforcement it followed for decades.”

The FCC's associate general counsel, Jacob M. Lewis, argued the case on behalf of the commission. “We are pleased that the court did not question the FCC's statutory responsibility to regulate indecent broadcasting,” the FCC said in a statement. “While we are disappointed by the court of appeals' decision, we note that the court overturned the FCC's 2006 forfeiture order on narrow procedural grounds. In the meantime, the FCC will continue to use all of the authority at its disposal to ensure that the nation's broadcasters fulfill the public interest responsibilities that accompany their use of the public airwaves.”

Meanwhile, the U.S. Supreme Court is reconsidering FCC v. Fox Television Studios, out of the Second Circuit, on the First Amendment impact of the FCC's fleeting expletive rules.