Judges Question FCC Policy in Oral Argument on Confidential Information Dispute
The FCC’s proposed release of confidential contract documents as part of its review of the AT&T/DirecTV and Comcast/Time Warner Cable deals was aggressively questioned by a three-judge panel during oral argument at the U.S. Court of Appeals for the D.C. Circuit Friday. “Why does the commission need it?” asked Judge David Tatel. “The FTC and the Justice Department, which also review mergers, do not require this material.” The oral argument, which took twice as long as scheduled, was in CBS et al. v. FCC, which is being closely watched by the communications bar (see 1502190053). The courtroom was standing room only.
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Though the arguments of the content company petitioners were also challenged, attorneys who observed the arguments told us that the FCC appeared to receive the most negative attention. Though attorneys said it's very difficult to predict the outcome of a case from oral argument, there were more questions and more difficult questions fired at FCC Acting Deputy General Counsel David Gossett than at Covington Burling attorney Robert Long, they said. Scheduled for only 10 minutes per side, the proceeding lasted a total of 40 minutes, with most of that time devoted to the judges questioning Gossett.
The question of whether the FCC had fulfilled its own requirements for sharing confidential documents was the focus of most of the questioning from Tatel and Judge Sri Srinivasan. Though Gossett argued that the FCC has the power to decide what documents are relevant to its own merger review, Srinivasan and Tatel focused on language in FCC confidentiality policy requiring “a showing that the information is a necessary link in a chain of evidence that will resolve an issue before the commission.” Srinivasan and Tatel asked whether FCC protective orders on the contract information and their filings in the case have shown that necessary link. “There’s a delta between relevant and necessary,” Srinivasan said.
The FCC needs to share the confidential documents because its standard of transaction review is different from FTC and DOJ, Gossett said. The deals involve five of the largest video programming companies, making video programming confidential information (VPCI) extremely relevant, Gossett said.
Srinivasan also questioned what he described as a “gap” in the FCC’s reasoning for allowing third parties access to the contract information. The commission has argued that the documents should be included in the record so that third parties can provide the most complete comments on the competitive impacts of the deals. Under the protective order issued by the FCC, the actual third parties are barred from seeing the contract information -- only their outside counsel not in charge of contract negotiations is allowed to view the documents, Srinivasan pointed out. “The interested parties don’t ever see the information.” The FCC didn’t comment.
Long characterized the FCC proposal to share the documents as “crowdsourcing,” and argued that even many employees of the content companies don’t get to see the documents that would be shared under the protective order. Judge Robert Wilkins said the protective order contained provisions stopping lawyers who viewed the confidential information from sharing it, but there was nothing stopping them from using it to help future clients. Gossett disagreed, citing a provision barring the use of the VPCI.
The judges also questioned Gossett about a Media Bureau-issued revision to the protective order under which the bureau could grant access to VPCI to attorneys whose access was challenged by content companies within five days of overruling the objection. That revision meant content companies don’t have time for a court challenge of their objection being overruled, Long said. He argued that the policy change was enacted without sufficient notice. Gossett pointed to two places on the revised order that mention it amends the policy, but the judges seemed underwhelmed. “That’s it?” Tatel asked. Amending an order is different from changing a long-standing policy, Srinivasan said. "A change is a change," Gossett said.
The judges’ focus on the details of the FCC’s arguments could indicate an inclination to overturn or remand the commission’s decisions, said Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman. He isn't involved in the case but has said he supports the FCC’s point of view in this matter. Communications attorney Jack Goodman, representing NAB in the case, was more careful: “You can never tell how a case will go from oral argument."