D.C. Cir. to Comcast: “Making You Obey The Law Is Not A 'Vendetta.'”

When an industry challenging agency action loses the sympathy of the D.C. Cir., it is a good sign that someone overreached just a tad. In apparent preparation for the The Big Cable Show in New Orleans this week, the D.C. Circuit issued this opinion denying Comcast’s insistence that it deserves a waiver of the FCC’s cable set-top box interoperability rules.

The case actually has an interesting precedential aspect I shall discuss below, but the primary reason I am noting it is because this is the first in a series of cases in which Comcast and the rest of the cable industry have actually pleaded that they should be excused from the law because enforcement is all part of an evil vendetta by Kevin Martin against the cable industry. Really. Because while people may accuse Hilary Clinton of having a “sense of entitlement” about the Democratic Nomination, she has the humility of a saint with zero self-esteem compared with the ravening sense of entitlement of the cable industry.

Mind you, the cable industry won won so much for so long at the FCC that a Chairman willing to enforce the law against the cable industry, with 2 other Commissioners willing to vote with him, is quite the shock to the system. And of course, when you have a paid chorus of wholly owned subsidiaries in Congress and captive industry press (combined, I’m sad to say, with a boatload of easily manipulated public interest groups that should know better but hate Kevin Martin for other reasons), it becomes easy to believe your own press releases. Which is why not merely the cable industry, but their allies as well, have started to put some genuinely stupid and insulting things in their filings that make you shake your head and go “whoa! I can’t believe they actually said that!”

And neither could the D.C. Cir. Not only did the panel hearing the case dryly reprimand the cable industry a few times, but they gave Comcast ‘n friends a very thorough bitchslap in the opinion.

More fun details, and the actual useful legal point, below . . . .

As I’ve observed before, the D.C. Cir. is one of the most activist courts in the current Federalist Society effort to return to the golden age before the New Deal when administrative agencies knew their place and courts were free to treat economic activity as a civil right (and actual civil rights as non-existent). Don’t take my word for it. Read this piece by Judge Douglas Ginsburg – one of the leading lights of the movement and a leading jurist on the D.C. Circuit. To hear him tell it, the regulation of market actors, even if the avowed purpose is to create or maintain the very competition on which the free market depends, deserves no deference from the court whatever that stupid old Supreme Court keeps saying.

So it is no surprise that when industry folks want to appeal a regulation, they rush to the DC Cir. Hell, back in 2006, when the cable cos and telcos were pushing the COPE legislation, they tried to make the DC Circuit the only place you could appeal FCC decisions.

What is a surprise, however, is when the D.C. Cir. issues a decision that not only displays no sympathy for industry in the face of regulation, but actually rips the cable industry a new one for the nature of their pleading. That takes real doing, not just on the part of Comcast, the actual petitioner in this case, but on the part of the intervenors as well. They have become so convinced that they are the victims of a vendetta against the cable industry by Kevin Martin that not only can anyone see this fact plainly, but all right minded people will naturally agree that it is so. After all, there is no end of trade press reporters (who know which side their bread is buttered on), members of Congress (same), bloggers (who hate Kevin Martin as a “bellhead”), civil rights groups (who either hate Martin for their own reasons or are simply owned outright by the cable industry), think tanks, and various sock puppets making up a heavenly choir chanting “Kevin Martin hates the cable industry and serves the Bells! Regulation of the cable industry is unjust and cruel! Cable faces vigorous competition and all its customers are happy, happy HAPPY! Ignore the customer surveys and other evidence to the contrary. It is all lies spread by the evil Kevin Martin!!! Punish him, punish him, oh loyal Cable minions.”

Mind you, it doesn’t help that Martin managed to piss off fellow Commissioners such as Jonathon Adelstein, who did not appreciate Martin’s “hardball” tactics and expressed considerable suspicion of Martin’s motives as a consequence. Nor does it help that Congressional Dems pissed off about shenanigans on the broadcast-ownership front see plenty of reason to make common cause with the Rs doing the cable cos bidding. It’s a heady brew, and has clearly prompted Comcast and the cable industry to utterly lose their sense of judgment and start writing things judicial pleadings that would get failing grades from a 1st year law student.

For example, my employer, Media Access Project, is in the Sixth Circuit over the FCC’s order on leased access. While we liked a lot of it (for example, the new rate structure), there are elements we didn’t like. Notably, the fact that cable operators can still pick what tier to put programmers on rather than allow the programmer to pick seriously (in our opinion) undermines the effectiveness of leased access scheme. So we petitioned for review in the Sixth Circuit, where our client Office of Communication of the United Church of Christ (the guys who, among other things, produced this nifty documentary about low-power FM) resides. The cable guys filed in the D.C. Circuit. We won the lottery, so the case is in the 6th Circuit.

The cable guys then petitioned the 6th Cir. to transfer the case back to the D.C. Circuit. Among the other charming assertions in the transfer motion:

1) Who cares about these stupid programmers anyway? Their interest cannot possibly compare to the interests of us cable system operators; and,

2) Because this case is just one instance of Kevin Martin pursuing an evil vendetta against the cable industry, and the other evil vendetta cases are in the D.C. Circuit, the 6th Cir. should transfer this to the D.C. Circuit so the D.C. Circuit can try the whole conspiracy together.

While the first is no doubt a sincere belief on the part of the cable industry, it is generally considered impolitic to say out loud. But the second is even wilder. It is the sort of thing you usually get on pro se pleadings from prisoners explaining that the CIA has planted a chip in their brains. Needless to say, as a party opponent, I am generally happy to see cable operators shoot themselves in the foot like this – as well as getting their opinion about programmers and the First Amendment rights of the public in official court filings under oath.

The Set-Top Box Waiver Appeal

Which brings us to last Friday’s case, Comcast Corp. v. FCC. This took a scant six weeks from oral argument to publication, which means that the judges really didn’t have much trouble reaching a decision. Mind you, that was apparent at oral argument, when one of the judges admonished that Comcast’s over-the-top rhetoric accusing the FCC of nasty discriminatory behavior went too far. Comcast’s counsel conceded that perhaps he had overstated a tad, but then proceeded to engage in the following colloquy:

Concast guy: I just don’t see how the court could side with the FCC in this case?

Judge: Don’t you think that may be overstating your case a little?

Comcast guy: No your honor, I just don’t see how you could possibly side with the FCC here.

Judge: Well, I guess we’ll just have to struggle.

Which brings us to the juicy bits in the opinion. The court begins by noting that the cable boys have been here twice before to try to get the cable set-top box interoperability rule overturned, and gotten a paddling from the court each time. Yes, Congress really could order cable operators to have a standard interface for attaching cable boxes, and yes, the FCC really could makes rules implementing it, and could really require you all to comply after ten years of delay.

Comcast based its case against Kevin Martin (and the rest of the FCC) on two basic arguments. (1) the FCC PWOMISED!!! in 2005 that it would “entertain waiver requests” for low cost set-top boxes with minimum functionality, so Comcast insisted it is entitled to a waiver for its three cheapest set-top boxes, despite the fact these boxes are loaded with sophisticated features and despite the fact that “entertain waiver requests” does not mean “you deserve a waiver because you’re you, Comcast. Get over yourself.” (2) The FCC granted waivers to RCN, Verizon, and a handful of others BUT NOT COMCAST!!! That proves beyond a shadow of a doubt, say Comcast, the National Cable Telecommunications Association, and the rest of Comcast’s Greek Chorus that the only thing that can explain the denial of the Comcast waiver request is that Kevin Martin is EEEEEEEVVVVVVVIIIIIIIILLLLLL. And the court must punish him, yes My Precious, because bad Chairmens who spitz on Comcast get sent to Basement Cat and sitz in dirty litter boxes for eternity.

The D.C. Circuit, clearly not a LOL Cats reader, disagreed. It found the FCC’s actions “quite reasonable” because (a) Comcast was not entitled to a waiver, and (b) it’s arguments that it is entitled to a waiver anyway were — and I am using a technical legal term here — really, really stupid. The D.C. Circuit said last time that the rules were perfectly fine, so actually enforcing the rules is rather reasonable for an agency, no? The FCC saying it would “entertain requests for a waiver” “did not reflect a binding commitment by the Commission to grant waivers to all low-cost devices” –- something obvious to everyone but Comcast and its kindred cable spirits. This is especially true when the “low-cost, limited capability” boxes Comcast sought waivers for had all kinds of advanced features. Time and again, the court uses phrases like “the Commission’s limited interpretation of its 2005 Order was not unreasonable” and “the denial of the waiver is easily reconcilable with the 2005 Order” and so forth.

But the ultimate bitch slap to Comcast and its bully boys and useful idiots comes on page 11 n.2:

The briefs filed by Comcast, the intervenors, and the amici make assertions bordering on accusations of the Commission’s bad faith. We must presume an agency acts in good faith, Thomas v. Baker, 925 F.2d 1523, 1525 (D.C. Cir. 1991), but in any case we see no substance to these assertions. (emphasis added)

Or, to translate from the legalese: “Comcast, you and the rest of the cable industry need to get over yourselves and get a clue. The FCC requiring you to obey the law is not a ‘vendetta,’ even if previous FCC Chairs and Media Bureau Chiefs preferred to kiss your feet and be your willing bi-yatches. The free ride is over, so get used to it.”

Which brings us to the one interesting legal point. Comcast rested its accusations of nefariousness on the fact that the FCC granted a waiver to Verizon, RCN, and a bunch of other cable systems. Comcast, of course, ignores such differences as the fact that (a) the standard in question was based on DOCSIS, which Verizon and the other telcos don’t actually use, so as a technical matter there are compliance issues, (b) the other cable operators that got waivers are much smaller, as opposed to Comcast and Time Warner and the other incumbent cable operators who control much larger segments of the market – a factor relevant in whether requiring compliance will have significant impact, and (c) the waivers came with a hook – full conversion to digital systems. While I might not favor using one statutory provision to force a technological change as a matter of policy, it is arguably a legitimate tactic even if the first two reasons weren’t good enough.

The Court held that Comcast could not raise the argument that the denial of its waiver was unfair in light of the grant of the other waivers because the other waivers were granted at the Bureau level, whereas Comcast appealed its denial to the full Commission and was rejected by the full Commission. According to the Court, what Comcast should have done was challenge the grant of the waivers to the other providers. Comcast said it didn’t mind other people getting off, but it wanted to get off too. The Court said too bad, because mere Bureau level action is not binding on the Commission.

Given the amount of “street law” that Bureaus manufacture for the benefit of their industry “clients,” this statement by the D.C. Circuit is rather significant. It means, for example, that even if the media Bureau ignores joint sales agreements that amount to an ownership interest, the Commission can still reject such agreements if the only precedent is Bureau level precedent. That is likely to make this case important long after the impossible whiny-ness of Comcast and the rest of the cable industry have faded into a bad joke.

In the end, the question remains whether or not Comcast and the Cable Chorus are going to wake up and smell the coffee and at least stop saying stupid things about a vendetta by the FCC in pleadings. I rather hope not, actually. Like the Republican party they own, the longer they go without recognizing how much they sound like idiots, the more idiotic things they will say and do. Perhaps Kyle McSlarow (who can be found spinning the same trash talk at the Big Cable Show as if nothing has happened) will name NCTA’s next anti-Kevin Martin campaign after an anti-depressant. As a party opponent in a number of proceedings, I can certainly hope so.

Stay tuned . . . .