Sgci Holdings III LLC v. Federal Communications Commission

District Court, District of Columbia·Decided August 19, 2025·No. Civil Action No. 2024-1204·Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

SGCI HOLDINGS III LLC, et al., :

:

Plaintiffs, : Civil Action No.: 24-1204 (RC)

:

v. : Re Document Nos.: 44, 46, 47, 49, : 54, 56, 57, 59 FEDERAL COMMUNICATIONS : COMMISSION, et al., :

:

Defendants. :

MEMORANDUM OPINION

GRANTING DEFENDANTS’ MOTIONS TO DISMISS I. INTRODUCTION

In April 2024, Soohyung Kim and SGCI Holdings III LLC (collectively, “Plaintiffs”)

sued a panoply of public and private actors—including the Federal Communications Commission (“FCC”), two FCC officers in their official capacity, a media company, a satellite television company, two unions, two non-profit organizations, and individuals associated with those entities (collectively, “Defendants”)—alleging that a racist conspiracy amongst these actors derailed an $8.6 billion merger contingent on FCC approval. Plaintiffs allege that various combinations of Defendants violated (1) the Fifth Amendment’s Equal Protection Clause; (2) a statute related to FCC consideration of broadcast license-transfer applications, 47 U.S.C. § 310(d); (3) various civil rights statutes, 42 U.S.C. §§ 1981, 1985(3), 1986; and (4) D.C. common law tortious interference and civil conspiracy claims. Defendants separately moved to dismiss the claims against them under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons stated below, Defendants’ motions to dismiss are granted.

II. BACKGROUND

A. Factual Background 1

Kim immigrated to the United States from South Korea at age five. First Amended Compl. (“FAC”) ¶ 20, ECF No. 36. He was raised in New York, where he still lives, and is an American citizen. Id. ¶¶ 20, 29. Since graduating from Princeton, Kim has spent 25 years in the finance industry, and over 15 of those years building his investment company, Standard General, which has earned him a reputation as a successful leader in the media industry. Id. ¶¶ 20–21, 52. Kim is the “founder and chief investment officer of Standard General and [a] managing member of SGCI Holdings III, an affiliate of Standard General.” Id. ¶ 29. As of 2022, “Standard General’s affiliates owned [broadcast] stations across the country, all run by CEO Deborah McDermott.” Id. ¶ 7.

In early 2022, Standard General won a public bidding auction to buy TEGNA, Inc., a publicly traded broadcast and media company, beating out the Allen Media Group—which is run by Byron Allen, who is black. Id. ¶¶ 1, 7, 17, 59–62. “As with other large mergers in the industry, the Standard General-TEGNA merger was conditioned on clearing three regulatory hurdles: (1) review by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, an inter-agency committee coordinated by DOJ and commonly known as ‘Team Telecom,’ (2) expiration of the DOJ’s antitrust waiting period under the Hart-Scott-Rodino (HSR) Act, and (3) approval to transfer the broadcast licenses by the FCC.” Id. ¶ 68. Under the merger agreement, Standard General effectively had until May 22,

1 In resolving these motions to dismiss at the pleading stage, the Court “accept[s] all the well-pleaded factual allegations of the complaint as true and draw[s] all reasonable inferences from those allegations in the plaintiff’s favor.” See Banneker Ventures, LLC v. Graham, 798 F.3d 1119, 1125 n.1 (D.C. Cir. 2015).

2023 to clear these hurdles or TEGNA would terminate the merger agreement, and Standard General would owe a $136 million fee. Id. ¶¶ 63, 66. This deadline was “widely reported and included in Standard General’s public filings with the FCC.” Id. ¶ 67. Plaintiffs expected that the 450-day window would be “ample,” in part due to Kim’s previous experiences where “the FCC had approved without issue license-transfer applications in two major broadcast television deals involving Mr. Kim’s media companies.” Id. ¶¶ 63, 117.

The Communications Act requires the FCC to determine whether “the public interest, convenience, and necessity will be served” before approving the transfer of a broadcast station license. 47 U.S.C. § 310(d). If the FCC is unable to make a determination based on “the application, the pleadings filed, or other matters which it may officially notice” because a “substantial and material question of fact is presented,” then the FCC “shall formally designate the application for hearing.” Id. § 309(d)(2), (e). The FCC has delegated review of broadcast license-transfer applications to its Media Bureau. See id. § 155(c); 47 C.F.R. § 0.61(a).

“Standard General, TEGNA, and Cox Media Group (which would acquire eight existing TEGNA stations as part of the deal) filed the required license-transfer applications and petition for declaratory ruling in March 2022.” FAC ¶ 120. After additional correspondence, on April 21, 2022, “the Media Bureau deemed Standard General’s license-transfer applications and petition for declaratory ruling complete.” Id. ¶ 126. At this point, Plaintiffs expected that the transfers would be approved around October 2022 based on past FCC practice, including the FCC’s 180-day “shot clock.” Id. But according to Plaintiffs, certain bad actors intended to prevent that from happening.

Amongst those bad actors was FCC Chairwoman Jessica Rosenworcel, who Plaintiffs assert was “under the thumb of high-ranking Democrats in Congress” and who “had her staffer,”

Media Bureau Chief Holly Saurer, “kill the deal with a pocket veto without ever putting it before the other Senate-Confirmed FCC commissioners.” Id. ¶¶ 4, 11. 2 According to Plaintiffs, Rosenworcel felt political pressure at the time Standard General filed for FCC approval because “the Senate was considering President Biden’s nomination of Gigi Sohn to fill” the vacant FCC commissioner spot, and “many wanted to see [Sohn] serve as the new chair of the FCC, instead of Chairwoman Rosenworcel.” Id. ¶ 124. But Rosenworcel and Saurer allegedly were not acting alone.

A central figure in the alleged scheme was lobbyist David Goodfriend of Emmer Consulting, Inc., formerly known as the Goodfriend Group. See id. ¶¶ 25, 37. “Mr. Allen’s longtime lobbyist,” Goodfriend, allegedly “orchestrated objections to the Standard General- TEGNA transaction by labor unions and public interest groups at the FCC,” while also lobbying the FCC on behalf of Allen and DISH Network. Id. Goodfriend also had ties to Rosenworcel through their time working at the FCC during the Clinton administration, as well as Goodfriend’s subsequent support of Rosenworcel’s advancement at the FCC. Id. ¶ 161.

On April 27, 2022, “Chairwoman Rosenworcel had a scheduled meeting with DISH’s [chairman and majority shareholder] Charlie Ergen for breakfast at The Dupont Circle Hotel.” Id. ¶¶ 24, 36, 127. Though the Complaint does not allege what was discussed at this breakfast, Plaintiffs assert DISH “had a direct interest in the Standard General-TEGNA retransmission fees it would pay to carry the TEGNA stations.” Id. ¶ 138.

On May 8, 2022, Allen told reporters that he had not given up on his efforts to buy TEGNA. Id. ¶ 128. Four days later, “Mr. Allen’s longtime lobbyist [David Goodfriend] had a

2 Pursuant to Federal Rule of Civil Procedure 25(d), Commissioner Rosenworcel and Media Bureau Chief Saurer, who are sued only in their official capacity, have been substituted for their successors.

scheduled meeting with Ms. Saurer” to discuss “a diversity initiative that [Goodfriend] was spearheading.” Id. ¶ 129. Goodfriend had already filed a petition related to that initiative, on which Common Cause and United Church of Christ Media Justice Ministry (“UCC”)—two nonprofits that are “frequent objectors at the FCC”—were co-petitioners, and Goodfriend later represented the Allen Group in connection with that diversity initiative as well. Id. ¶¶ 41, 111, 129.

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