Goodman v. Federal Communications Commission

182 F.3d 987, 337 U.S. App. D.C. 188, 16 Communications Reg. (P&F) 979, 1999 U.S. App. LEXIS 16002
CourtCourt of Appeals for the D.C. Circuit
DecidedJuly 16, 1999
Docket95-1585, 98-1373, 98-1488 to 98-1490
StatusPublished
Cited by35 cases

This text of 182 F.3d 987 (Goodman v. Federal Communications Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Goodman v. Federal Communications Commission, 182 F.3d 987, 337 U.S. App. D.C. 188, 16 Communications Reg. (P&F) 979, 1999 U.S. App. LEXIS 16002 (D.C. Cir. 1999).

Opinion

Opinion for the Court filed by Circuit Judge GINSBURG.

GINSBURG, Circuit Judge:

More than 4,000 individuals obtained licenses in the Specialized Mobile Radio (SMR) service apparently without realizing that the Federal Communication Commission’s “build out” rules require a licensee to construct and to begin operating a transmission facility within a specified period. The Commission extended the build out deadlines for an imprecisely specified group of the licensees, membership in which it later construed narrowly. The *990 petitioners contend the later decision was arbitrary and capricious. We do not reach the merits of the petitioners’ claim because the only one among them who sought review in time lacks standing to challenge the Commission’s decision.

I. Background

The commercial potential of an SMR license has grown dramatically in recent years. Previously used primarily for small-scale dispatch operations, SMR licenses have increasingly been used to provide cellular and data transmission services over a wide area. See Fresno Mobile Radio, Inc. v. FCC, 165 F.3d 965, 967 (D.C.Cir.1999). Seeking to capitalize upon this development, a number of companies began in the early 1990s to tout SMR licenses as investment opportunities for individuals. For a substantial fee (typically around $7,000) such promoters would prepare an SMR license application for an individual, who hoped to sell the license for a profit shortly after receiving it.

These so-called “application mills” neglected to tell their customers that under the Commission’s then-applicable rules a license would lapse if the licensee failed within eight months to build and to start operating a transmission system. Even a licensee who successfully started operating, moreover, would lose the right to exclusive use of any broadcasting channel not “loaded to” (i.e., in use by) 70 mobile units within the same eight month period. Few if any of the individuals who obtained SMR licenses with the help of an application mill intended to build transmission facilities or were even capable of doing so. Nor could they sell their licenses as planned because the Commission forbids the sale of a license before its holder satisfied the construction requirement. Consequently, many of the application mills’ customers lost their licenses and others were in jeopardy of losing them.

In January 1994 the Federal Trade Commission sued four application mills for fraud. See FTC v. Metropolitan Communications Corp., No. 93 CIV 0142 (S.D.N.Y. filed Jan. 11, 1994). Three days later, the district court placed the defendant companies in receivership and appointed Daniel Goodman the Receiver. In March 1994 Goodman petitioned the FCC temporarily to waive its build out rules in order to give the licensees who used the services of the companies in receivership an additional eight months in which to construct and load their systems. The Commission instead granted those “receivership licensees” an additional four months for construction. See Memorandum Opinion and Order, 10 F.C.C.R. 8537, ¶¶ 14-28 (1995) [Extension Order].

Even before the Extension Order could be published in the Federal Register and thereby take effect, Goodman sought a court order concerning its scope and proper implementation. He complained that Commission staff, apparently being of the view that the Order extended only the time for construction and not the time for loading channels to mobile units, continued to strip receivership licensees of their right to exclusive use of channels after only eight months. He also took the position that receivership licensees who had voluntarily canceled their licenses were entitled to the benefit of an extended build out period. The Commission agreed to delay the effective date of the Order while it discussed these issues with Goodman.

After more than two years of fruitless negotiations, the Commission unilaterally resolved all the outstanding issues. See Memorandum Opinion and Order and Order on Reconsideration, F.C.C. 98-167 (1998) [Implementation Order]. The agency first concluded that because Goodman represented only the application mills and not their customers, he did not have standing on behalf of the receivership licensees to challenge the agency’s decisions. See id. at ¶ ¶ 28-34 (applying 47 C.F.R. § 1.106). Nevertheless, the Commission on its own motion addressed and rejected Goodman’s substantive arguments. The agency then turned to the question wheth *991 er licensees defrauded by application mills other than the four the FTC had sued (the so-called “similarly situated” licensees) should have the benefit of the four month enlargement of the construction period granted to the receivership licensees in the Extension Order. It determined that they should — provided they had filed a request for an extension before the expiration of their original eight month deadline. See id. at ¶ ¶ 59-60. In contrast, the agency gave the receivership licensees the extension regardless whether they had applied for it before the expiration of their original deadlines.

Goodman petitioned for review of the Implementation Order in August 1998, arguing that the Commission had arbitrarily and capriciously refused to revive the licenses that had been voluntarily canceled and to extend the receivership licensees’ deadlines for loading. On October 9 of that year the agency released a list of licensees it considered similarly situated to the receivership licensees within the meaning of the Implementation Order. On October 26 Chadmoore Wireless Group, Inc., a holder of numerous similarly situated licenses; SMR Services, Inc., a license broker; and 22 individuals holding similarly situated licenses (collectively the Licensee Petitioners) petitioned for review of the Implementation Order, arguing that it gives the receivership licensees preferential treatment and that the agency unlawfully failed to give them prior notice that the Order would affect their interests.

II. Analysis

The Commission claims that none of the petitions for review is properly before us. Goodman, it says, lacks standing, and the Licensee Petitioners failed to seek review in the time allowed. We find merit in both arguments.

A. The Standing of the Receiver

According to the Commission, Goodman lacks standing because the application mills of which he is Receiver were not themselves affected by the agency decisions at issue. Because Goodman sues solely in his capacity as Receiver, we first address the significance of that status.

Goodman suggests that a receiver has the power to sue on behalf of customers and creditors of the entity in receivership even when the entity itself would not have standing to do so. The sole case upon which he relies, however, does not support his position. The plaintiff in Scholes v. Lehmann, 56 F.3d 750

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Bluebook (online)
182 F.3d 987, 337 U.S. App. D.C. 188, 16 Communications Reg. (P&F) 979, 1999 U.S. App. LEXIS 16002, Counsel Stack Legal Research, https://law.counselstack.com/opinion/goodman-v-federal-communications-commission-cadc-1999.