397 F.2d 717 | D.C. Cir. | 1968
Lead Opinion
We review an order of the Federal Communications Commission, entered without hearing and over the dissent of three Commissioners, granting a modification of Coral Television Corporation’s permit to construct a television broadcast facility in South Miami, Florida. The order also rejected the Petition to Deny of L. B. Wilson, Inc., the licensee of a television station in Miami.
No construction permit or station license, or any rights thereunder, shall be transferred, assigned, or disposed of in any manner, voluntarily or involuntarily, directly or indirectly, or by transfer of control of any corporation holding such permit or license, to any person except upon application to the Commission and upon finding by the Commission that the public interest, convenience, and necessity will be served thereby.
On the other hand the transferee of a license is simply one who is willing to pay the most money for the license. The Commission may not consider whether others are better qualified.
To assist the Commission in these proceedings aggrieved private parties are also encouraged to participate as private attorneys general.
The information before the Commission in this case showed the following. In 1964, when Coral was awarded the license to construct Channel 6,
The Commission was of the view that since a majority of stock passed to others than the original stockholders, de jure control of the company had been transferred even though the original stockholders were able to vote a majority of the stock. But it concluded that since Coral had not concealed or misrepresented the foregoing information in its periodic ownership reports, Coral’s failure to announce this de jure transfer of control, as required by Section 310(b) of the 1934 Act, was an honest error in judgment and did not reflect bad faith. Moreover, the Commission found that Clyne did not have de facto control of the corporation. Whatever prerogatives he exercised were not inconsistent with his position as the largest single stockholder and were offset by the power which the 10 original stockholders main
Without the vote of stock owned by someone else, he cannot block sale of the station; he and his appointees own less than a majority of the stock and they cannot, by vote of their stock, control the corporation. Clyne alone cannot designate the majority of the Board of Directors and, lacking numerical superiority on the Board, they cannot control the Board of Directors or corporate policies.
Appellants urge, however, that Gardner, one of Clyne’s appointees to the Board of Directors, is so linked to Clyne that Gardner will vote his shares at Clyne’s direction.
The Commission, having been alerted to the problem of corporate control, had a duty to explore any related matters which might bear upon the public interest, whether urged by the parties or not.
The Stock Purchase Agreement which governed the sale of the 200 shares of Coral stock to Clyne provided for fixed procedures for all future non-family transfers of Coral stock. The Seller must (1) notify other stockholders of the shares available, price bid, terms of payment and date of offer; (2) “offer to sell to other stockholders all or any part of the shares described in the letter at exactly the same price per share and upon exactly the terms as described in the letter [Emphasis added]”; (3) allow other stockholders 30 days in which to purchase that percentage of shares offered which the number of shares then
If the Agreement had been observed, 23 other stockholders would have had the opportunity to purchase the shares at $750 per share or $125 per share less than they had paid for Coral stock the last time the shares had been made available. Nothing in the record, however, suggests that this offer was ever made. Questions may arise, for example, whether the failure of the 23 others to insist on the prescribed procedures reflects their recognition of Clyne’s control of Coral or their bona fide business judgment, and whether any of the circumstances are inconsistent with the regulatory scheme.
. Section 309(d) of the Communications Act of 1934, 48 Stat. 1085 (1934), as amended 47 U.S.C. § 309(d) (1964), requires Wilson’s petition to contain specific allegations to show its interest as a party and to show that a “grant of the application would be prima facie inconsistent with [the public interest, convenience and necessity].” We have said that “What is required is merely an articulated statement of some fact or situation which would tend to show, if established at a hearing, that the grant of the license contravened public interest, convenience, and necessity * * Federal Broadcasting System v. FCC, 96 U.S.App.D.C. 260, 263, 225 F.2d 560, 563 (1955).
. 48 Stat. 1086 (1934), as amended 47 U.S.O. § 310(b) (1964):
. See Note, 108 U.Pa.L.Rev. 868, 880 (1960); Farmers Educational and Cooperative Union etc. v. WDAY, Inc., 360 U.S. 525, 79 S.Ct. 1302, 3 L.Ed.2d 1407 (1959) (“Thus, expressly applying this country’s tradition of free expression to the field of radio broadcasting, Congress has from the first emphatically forbidden the Commission to exercise any power of censorship over radio communication.” Id. at 529-530, 79 S.Ct. at 1305); Section 326 of the 1934 Act, 48 Stat. 1091 (1934), as amended 47 U.S.C. § 326 (1948), was taken from § 29 of the Radio Act of 1927, 44 Stat. 1172, and provides that:
Nothing in this chapter shall be understood or construed to give the Commission the power of censorship over the radio communications or signals transmitted by any radio station, and no regulation or condition shall be promulgated or fixed by the Commission which shall interfere with the right of free speech by means of radio communication.
. 48 Stat. 1084 (1934), as amended 47 U.S.C. § 308(b) (1962).
. Ashbacker Radio Corp. v. FCC, 326 U.S. 327, 66 S.Ct. 148, 90 L.Ed. 108 (1945).
. 48 Stat. 1086 (1934), as amended 47 U.S.C. § 310(b) (1964).
. Id.
. Id.
. FCC v. WOKO, Inc., 329 U.S. 223, 227, 67 S.Ct. 213, 91 L.Ed. 204 (1946).
. 48 Stat. 1085 (1934), as amended 47 U.S.C. § 309(d) (2) (1964):
If a substantial and material question of fact is presented or if the Commission for any reason is unable to find that grant of the application would be consistent with [the public interest, convenience and necessity, the Commission may order a hearing] [Emphasis added].
. Folkways Broadcasting Company, Inc. v. FCC, 126 U.S.App.D.C. 123, 375 F.2d 299, 302 (1967).
. 48 Stat. 1085 (1934), as amended 47 U.S.C. § 309(d) (1) (1964).
. Mansfield Journal Co. v. FCC, 86 U.S. App.D.C. 102, 106, 180 F.2d 28, 32 (1950).
. Clarksburg Publishing Co. v. FCC, 96 U.S.App.D.C. 211, 215, 225 F.2d 511, 515 (1955). See also Ward v. Anderson, 93 U.S.App.D.C. 156, 158-159, 208 F.2d 48, 50 (1953).
. 47 C.F.R. § 1597 (1967).
. Citizens TV Protest Committee v. FCC, 121 U.S.App.D.C. 50, 56, 348 F.2d 56, 62 (1965).
. Channel 6 was first assigned to the Miami area in 1957. At that time the Commission expected its facilities to be located within the city of Miami. Miami Drop-In Case, 15 Pike & Fischer, R. R. 1638a (1957). Thereafter Coral, Publix Television Corporation and South Florida Amusement Co., Inc. applied for this channel and participated in a comparative hearing over the next three years. Although the Initial Decision awarded the channel to South Florida, questions involving the character of one of its principals forced reconsideration. These character proceedings ceased when South Florida and Coral agreed that Coral alone would seek the license in exchange for a payment to South Florida for expenses incurred in developing the broadcast facility. This arrangement was approved by the Commission, which granted in 1964 Coral’s application for a construction permit in South Miami where Coral believed it could secure the transmitter site which best conformed to the Commission’s regulations. Publix Television Corp., 36 F.C.C. 1215, 2 Pike & Fischer R.R.2d 481 (1964).
. Between 1964 and 1965 one of the original stockholders died and his stock passed to his son as Executor.
. In footnote 2 of its Reply to Opposition to Deny, Wilson alleged that:
2 When Wilson inspected the Commission’s ownership report files prior to filing its Petition to Deny, the Coral report (filed April 12, 1966) showing the acquisition by Hy Gardner (and family) of 5% of Coral’s stock from Mr. Clyne was not in the file. Since Mr. Gardner is obviously Mr. Clyne’s nominee for the Coral Board of Directors (he was elected the same day Mr. Clyne acquired his stock in Coral), Messrs. Gardner and Clyne are clearly in privity and this 5% shareholding must be charged to Mr. Clyne for control purposes [Emphasis added].
. “With questions of the present sort, centering on the character of an applicant, our function is primarily to see whether the Commission’s judgment, based on the record as a whole, is reasonable and within its proper discretion.” Kidd v. FCC, 112 U.S.App.D.C. 288, 289, 302 F.2d 873, 874 (1962); accord Community Broadcasting Corporation v. FCC, 124 U.S.App.D.C. 230, 363 F.2d 717, 718-719 n. 1 (1966). Here, however, the Commission neither considered nor dealt with Wilson’s important contention of privity. Cf. Kidd v. FCC, Id.
. Clarksburg Publishing Co. v. FCC, supra note 11, and Citizens TV Protest Committee v. FCC, supra note 12. But see Order of Majority in FCC 68-155, 12440, Voluntary Assignment of License of KLAS, Las Vegas, from Las Vegas Television, Inc. to Hughes Tool Co. Cf. Dissent of Commissioner Nicholas Johnson (unreported, Feb. 21, 1968).
Concurrence Opinion
(concurring) :
I have no difficulty with the court’s disposition of this case. This concurrence is written only to assure that certain expressions in the majority opinion are not carried over uncritically to a different kind of situation. As the majority point out, the parties cannot control the flow of information to the Commission on the issue of trafficking, or for that matter on any other issue. In a broad sense the Commission has a “duty” to consider matters bearing on the public interest, and specifically matters bearing on transfer of control, though not urged by the parties.
In this case, since there must be a remand anyway, the court’s indication that consideration be given to factual points thus far only lurking in the yecord
. The revelant statute, 47 U.S.C. § 309(d) (1964), directs a hearing where an interested party makes “specific allegations of fact” “supported by affidavit” and “ [i] f a substantial and material question of fact is presented.” A hearing is also appropriate if the Commission is unable to find that the application grant would be in the public interest.
. See 3 K. Davis, Administrative Law Treatise § 20.06 (1958); L. Jarre, Judicial Control or Administrative Action 454-458 (1965); United States v. L. A. Tucker Truck Lines, Inc., 344 U.S. 33, 37, 73 S.Ct. 67, 97 L.Ed. 54 (1952).
. See, e. g., Community Broadcasting Service, Inc. v. FCC, 126 U.S.App.D.C. 258, 377 F.2d 143 (1967); WLIL, Inc. v. FCC, 122 U.S.App.D.C. 246, 352 F.2d 722 (1965); Massachusetts Bay Telecasters, Inc. v. FCC, 104 U.S.App.D.C. 226, 238, 261 F.2d 55, 67 (1958); Albertson v. FCC, 100 U.S.App.D.C. 103, 105, 243 F.2d 209, 211 (1957); O’Neill Broadcasting Co. v. FCC, 100 U.S.App.D.C. 38, 241 F.2d 443 (1956); Pinellas Broadcasting Co. v. FCC, 97 U.S.App.D.C. 236, 238-239, 230 F.2d 204, 206-207, cert, denied, 350 U.S. 1007, 76 S.Ct. 650, 100 L.Ed. 869 (1956).
The approach of Judge Bazelon apparently assumes greater freedom in the courts to raise issues in the public interest that were not presented to or considered by the FCC. See Pinellas Broadcasting Co. v. FCC, supra (dissenting opinion); Citizens TV Protest Comm. v. FCC, 121 U.S.App.D.C. 50, 56, 348 F.2d 56, 62 (1965); Clarksburg Publishing Co. v. FCC, 96 U.S.App.D.C. 211, 215, 225 F.2d 511, 515 (1955). Apparently the issue of “trafficking” is considered to involve some exception to the requirement of exhaustion of administrative remedies.
. 47 U.S.C. § 405 (1964) provides:
The filing of a petition for rehearing shall not be a condition precedent to judicial review of any such order * * except where the party seeking such review * * * relies on questions of fact or law upon which the Commission * * * has been afforded no opportunity to pass.
See cases cited note 3 supra.
. See, e. g., NLRB v. Jones & Laughlin Steel Corp., 331 U.S. 416, 428, 67 S.Ct. 1274, 91 L.Ed. 1575 (1947); NLRB v. Cheney California Lumber Co., 327 U.S. 385, 388, 66 S.Ct. 553, 90 L.Ed. 739 (1946); Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 85 L.Ed. 1037
. Nobody alerted this court or the agency to the fact — if it be a fact — that when Clyne made a transfer to Gardner at his cost the other 23 stockholders had contract rights of first refusal which they failed to exercise, or suggested that this was probative evidence that they were under Olyne’s control.
. Courts and agencies are, after all, in a kind of partnership to serve the public interest. See City of Chicago v. FPC, 128 U.S.App.D.C. 107, 385 F.2d 629 (1967).