CBS v. FCC: Third Circuit Vacates FCC Fine

CBS Corp. v. Federal Communications Commission

Third Circuit, July 21 2008, No. 06-3575
Slip Opinion

On July 21, the Third Circuit vacated an FCC order fining CBS $550,000 for the nine-sixteenths of one second broadcasting of Janet Jackson’s bare right breast during the halftime show of Super Bowl XXXVIII in February 2004. The court held that the FCC had departed from its prior policy in fining CBS for the “fleeting image” and that this change was “arbitrary and capricious” under the Administrative Procedure Act § 706. The court also held that Janet Jackson and Justin Timberlake were independent contractors with respect to CBS while performing at the half-time show and that CBS could not be held vicariously liable for their actions without proof of scienter.

The case was remanded for further proceedings consistent with its ruling; however, the court noted that any further action would be declaratory in nature, as the FCC cannot retroactively penalize CBS.

Ken Ferree, president of The Progress & Freedom Foundation (“PFF”) hailed the ruling as a reinforcement of First Amendment rights. Adam Thierer, a senior fellow at the PFF, expects the FCC to appeal the decision, as it did a Second Circuit opinion holding that the FCC's policy sanctioning “fleeting expletives” was arbitrary and capricious.

Jonathan Rintels, Executive Director of the Center for Creative Voices in Media, also applauded the decision, focusing in particular on the “chilling” effect the FCC’s decisions might have on freedom of expression.

The Parents Television Council (“PTC”) was somewhat less pleased with the decision, which, in its view, “hijacked the will of the American people” and the “intent of Congress.”

Writing for the court, Chief Judge Scirica found that the FCC had a long-established policy that it would not take action against broadcasts of isolated or fleeting indecent material. The court rejected the FCC’s argument that its policy only applied to fleeting utterances and not fleeting images. It found instead that the distinction between words and images applied to CBS was a departure from the FCC’s prior policy. Analyzing the case under Motor Vehicle Manufacturers. Ass’n v. State Farm Mutual Automobile Insurance Co., 463 U.S. 29, 41 (1983), the court found that the agency could not change its policy without both notice and a reasoned explanation for the change. The FCC declined to acknowledge the policy change, let alone provide an explanation for it, and thus could not surmount the “arbitrary and capricious” standard.

In finding that Jackson and Timberlake were independent contractors, the court noted their significant control over the content and form of their performances as well as the one-time nature of the contract and the show. Additionally, the court reasoned that First Amendment considerations required scienter, some knowledge of wrongdoing, to be read into the statutory prohibition of broadcast indecency. Without some proof that CBS broadcasted with knowledge that the indecency would occur, the FCC could not find CBS liable.

Judge Rendell concurred with the majority in holding the FCC’s actions arbitrary and capricious but dissented with respect to the majority’s disposition on scienter and the decision to remand the case. Judge Rendell argued that, first, the majority’s discussion of scienter is dicta, and second, that CBS’s conduct was “willful” under the most reasonable interpretation of the term. Judge Rendell also argued that there was no need to remand the case as further proceedings would be unnecessary without the fine and the FCC could explain its change in policy in another case or issue a declaratory ruling.