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Monday, July 21, 2008

3rd Circuit ruling against FCC in Janet Jackson case
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The Federal Communications Commission (FCC) lost another major First Amendment-related case today involving its recent efforts to expand the parameters of "indecency" enforcement for broadcast programming. The case involves the now infamous "wardrobe malfunction" that occurred during an unscripted 2004 Super Bowl halftime performance involving singers Justin Timberlake and Janet Jackson. When Ms. Jackson's breast was exposed on camera for nine-sixteenths of one second, the FCC immediately launched an investigation into the incident and fines were eventually levied on the grounds that the fleeting exposure of Ms. Jackson's breast was a violation of broadcast decency standards. CBS challenged the FCC's decision, leading to a legal showdown in the U.S. Court of Appeals for the Third Circuit.

In today's decision, CBS Corp. v. FCC, the three-judge panel of the 3rd Circuit ruled that the Federal Communications Commission "acted arbitrarily and capriciously" when it imposed a $550,000 fine on CBS for the incident. The court's 102-page decision, which can be found here, was decided squarely on procedural grounds. That is, it didn't touch the more substantive speech-related issues or precedents such as the Pacifica or Red Lion decisions that constitute the foundations of all modern FCC broadcast regulation.

The case is important because it now joins the June 2007 decision handed down by the Second Circuit Court of Appeals in the case of Fox Television Stations v. FCC. That was the indecency case involving the FCC's new policy for "fleeting expletives." In that 2-1 decision, the Second Circuit ruled that "the FCC's new policy sanctioning 'fleeting expletives' is arbitrary and capricious under the Administrative Procedure Act for failing to articulate a reasoned basis for its change in policy." As a result, the FCC's order was vacated and remanded to the agency. [And the FCC is now challenging the decision in the Supreme Court.]

This is very similar to what the 3rd Circuit said today in the CBS case.

Specifically, the court held that:

Like any agency, the FCC may change its policies without judicial second-guessing. But it cannot change a well-established course of action without supplying notice of and a reasoned explanation for its policy departure. Because the FCC failed to satisfy this requirement, we find its new policy arbitrary and capricious under the Administrative Procedure Act as applied to CBS. (p. 14)

The court reached that finding by noting that the agency's previously "restrained" enforcement policy had changed quite suddenly and dramatically, and without much justification. "[A]n an agency must be afforded great latitude to change its policies, but it must justify its actions by articulating a reasoned analysis behind the change," the court argued. (pp. 30-31) "The agency's obligation to supply a reasoned analysis for a policy departure requires an affirmative showing on record." (p. 32). But the FCC failed in that regard, the court said:

The Commission's conclusion on the nature and scope of its indecency regime - including its fleeting material policy - is at odds with the history of its actions in regulating indecent broadcasts. In the nearly three decades between the Supreme Court's ruling in Pacifica and CBS's broadcast of the Halftime Show, the FCC had never varied its approach to indecency regulation based on the format of broadcasted content. (pp. 36-37)

The FCC was basically arguing that its actions in the Fox and CBS cases were nothing new and that the agency should be allowed to impose significant new penalties for fleeting words or images. But neither the 2nd or 3rd Circuits bought that argument. In today's decision the 3rd Circuit, for example, the judges held:

In sum, the balance of the evidence weighs heavily against the FCC's contention that its restrained enforcement policy for fleeting material extended only to fleeting words and not to fleeting images. As detailed, the Commission's entire regulatory scheme treated broadcasted images and words interchangeably for purposes of determining indecency. Therefore, it follows that the Commission's exception for fleeting material under that regulatory scheme likewise treated images and words alike. Three decades of FCC action support this conclusion. Accordingly, we find the FCC's conclusion on this issue, even as an interpretation of its own policies and precedent, "counter to the evidence before the agency" and "so implausible that it could not be ascribed to a difference in view or the product of agency expertise." State Farm, 463 U.S. at 43.

Because the Commission fails to acknowledge that it has changed its policy on fleeting material, it is unable to comply with the requirement under State Farm that an agency supply a reasoned explanation for its departure from prior policy. (pp. 47-48)

As you might have guessed from the context of that passage, the State Farm case referenced by the court dealt with how an agency must reach a decision by examining relevant data and articulating a reasonable explanation for the rational connection between that data and the decision made by the agency. Again, the court today held that the FCC did not pass that test nor the requirements of the Administrative Procedure Act: "Consequentially, the FCC's new policy of including fleeting images within the scope of actionable indecency is arbitrary and capricious under StateFarm and the Administrative Procedure Act, and therefore invalid as applied to CBS." (p. 49)

The court also rejected the FCC's assertion that CBS should be held liable on the common law doctrine of respondeat superior, which allows liability to be imposed on employers for the actions of employees. The question is: Where Timberlake and Jackson CBS employees? The court said no:

it is undisputed that CBS's actual control over the Halftime Show performances did not extend to all aspects of the performers' work. The performers, not CBS, provided their own choreography and retained substantial latitude to develop the visual performances that would accompany their songs. Similarly, as the FCC notes, CBS personnel reviewed the performers' selections of set items and wardrobes, but the performers retained discretion to make those choices in the first instance and provided some of their own materials.

Instead, the court held that Timberlake and Jackson were "independent contractors" for CBS and that the FCC was trying to breathe far too much life into the doctrine:

Under the FCC's rationale, band members contracted to play a one-song set on a talk show or a "one-show-only" televised concert special presumably would be employees of the broadcaster. These performers - who frequently promote their work through brief contractual relationships with media outlets - would be "employees" of dozens of employers every year.

So, what happens next? It's likely that the FCC will appeal, just as it has in the 2nd Circuit Fox case. One wonders why the agency doesn't just throw in the towel. As my boss Ken Ferree, President of PFF, noted in response to today's decision: "Perhaps it is time to read the handwriting on the wall: the guardians of our First Amendment freedoms in the courts are not going to allow the FCC to play the role of media supernanny. A free and vibrant, even if occasionally coarse, marketplace of speech is the cornerstone of a free society. We allow government to meddle in that marketplace at our peril."

You will not be surprised to hear that I agree with Ken! And I summarized some additional concerns about the FCC's expanded activism on this front in a joint amicus brief with the Center for Democracy & Technology to the 3rd Circuit before this case was heard. You can find that filing here.

posted by Adam Thierer @ 4:51 PM | Free Speech

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Quick follow-up... Sinclair Stewart of the Global and Mail (Canada) called me yesterday for comment on the long-term implications of the case for a story he was doing. Here's what I told him:

Adam Thierer, a senior fellow at the Progress and Freedom Association, a market-oriented think tank in Washington, argued that the FCC's aggressive fight against indecency is hastening the demise of the broadcast industry, which has already been hurt by alternative media like the Internet and cable. “These policies are beginning to write the death warrant for over-the-air broadcasting, because they unfairly single out the platform,” he said. He added that although the FCC is attempting to protect children with these policies, fewer young people are tuning into broadcast television, opting instead for largely unregulated media.

“One wonders what is the sense of all this in a world of media abundance,” he said. “The FCC is protecting adults from themselves.”

Posted by: Adam Thierer at July 22, 2008 9:08 AM

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