This article first appeared in Entertainment Law Matters, a Frankfurt Kurnit legal blog.
On November 2, 2011, the Third Circuit Court of Appeals entered the most recent decision in perhaps the most litigated nine-sixteenths of a second ever. The panel, in a 2-1 decision (available here), reaffirmed its prior holding that the penalty imposed by the Federal Communications Commission ("FCC" or "Commission") was "arbitrary" because the FCC failed to provide notice to CBS and others that its policy regarding fleeting material was changing. See CBS Corporation v. F.C.C., No. 06-3575 (3rd Cir. Nov. 2, 2011). In so doing, the appeals court found that the Supreme Court's decision in F.C.C. v. Fox Television Stations, Inc., 129 S. Ct. 1800 (2009) did not alter the Third Circuit's previous decision that the FCC's decision to fine CBS for the broadcast of Janet Jackson's breast during the half-time show of Super Bowl XXXVIII marked a change in the Commission's policy of which CBS did not have notice.
In Fox, the Supreme Court upheld the FCC's indecency findings against FOX for the station's broadcast of "fleeting expletives" during the 2002 and 2003 broadcasts of the Billboard Music Awards. The Court held that the FCC's explanation regarding the change its fleeting expletives policy was adequate under the Administrative Procedure Act. Prior to Fox, the Commission's policy excluded isolated or unrepeated expletives from the scope of actionable indecency.
In May 2009, the Supreme Court vacated the Third Circuit's decision to toss the $550,000 fine levied against CBS by the Commission and ordered the Third Circuit to re-examine the decision in light of the Court's holding in Fox. The appeals court concluded that the Fox decision only reinforced its earlier analysis and concluded again that the Commission's decision to fine CBS for Ms. Jackson's "wardrobe malfunction" was "arbitrary and capricious."
The Third Circuit concluded in its previous decision that the FCC's determination to fine CBS marked a shift in its policy which, prior to the February 2004 broadcast of the half-time show, exempted all fleeting material – words and images – from its indecency rules. The issue, as framed by the appeals court, was whether the fine was an improper penalty in light of the Commission's failure to provide notice to CBS of this shift. By contrast, in Fox, the FCC did not impose any forfeiture or other monetary sanction and openly acknowledged that its order broke new ground. Thus, the appeals court concluded that the Fox decision did not disturb its analysis and reaffirmed its decision.
Although the Third Circuit reached the same conclusion as before, it did not reinstate its previous opinion. Instead, the majority chose to adopt only certain portions; for example, the prior discussion regarding the scienter required for a violation was not readopted. Notably, Judge Scirica, who authored the previous opinion for the then unanimous court, was the lone dissenting judge. Judge Scirica disagreed with the majority's analysis and concluded that, in light of Fox, the FCC's fine did not mark a change in its policy.
The latest round goes to CBS and it appears that the FCC's legal struggles may not be over. Fox will be back before the Supreme Court on the issue of whether the Commission's enforcement policies violate the First or Fifth Amendment of the Constitution.
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