United States v. Northeast Communications of Wisconsin, Inc.

608 F. Supp. 2d 1049, 2008 U.S. Dist. LEXIS 48960, 2008 WL 2563234
CourtDistrict Court, E.D. Wisconsin
DecidedJune 25, 2008
Docket07-C-715
StatusPublished
Cited by1 cases

This text of 608 F. Supp. 2d 1049 (United States v. Northeast Communications of Wisconsin, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Northeast Communications of Wisconsin, Inc., 608 F. Supp. 2d 1049, 2008 U.S. Dist. LEXIS 48960, 2008 WL 2563234 (E.D. Wis. 2008).

Opinion

DECISION AND ORDER

WILLIAM C. GRIESBACH, District Judge.

The United States brought this action under 47 U.S.C. § 504 to enforce a $75,000 forfeiture imposed by the Federal Communications Commission against Defendant Northeast Communications of Wisconsin, Inc. (“Northeast”). The FCC imposed the fine as a result of Northeast’s communication with a bidder in a 2002 auction for licenses in the 698-746 MHz band of the electromagnetic spectrum. The FCC found that the communication between a Northeast representative and a bidder for another applicant, Star Wireless, LLC (“Star”) violated the anti-collusion rule found at 47 C.F.R. § 1.2105(c)(1). Both sides have moved for summary judgment on the basis of the stipulated facts found in the administrative record. For the rea *1052 sons given herein, the Plaintiffs motion will be granted and the Defendant’s denied.

I. BACKGROUND AND STATUTORY FRAMEWORK

As noted, the facts have been stipulated, and these facts are not extensive. On May 8, 2002, Northeast filed an application to participate in Auction No. 44, an auction for licences in the wireless spectrum. Another company, Star Wireless, LLC, had also filed such an application. In addition to requiring an application, the applicable auction regulations require that an applicant make an upfront payment in order to be able to participate in the auction. “If the applicant does not submit at least the minimum upfront payment, it will be ineligible to bid. Its application will be dismissed and any upfront payment it has made will be returned.” 47 C.F.R. § 1.2106(c). Star Wireless made an upfront payment, and thus it was an applicant qualified to bid. Defendant Northeast, however, did not make an upfront payment, and accordingly by the time of the auction it was ineligible to be a qualified bidder.

The regulation’s anti-collusion rule is found at 47 C.F.R. § 1.2105(c)(1):

(c) Prohibition of collusion.
(1) Except as provided in paragraphs (c)(2), (c)(8), and (c)(4) of this section, after the short-form application filing deadline, all applicants for licenses in any of the same geographic license areas are prohibited from cooperating or collaborating with respect to, discussing with each other, or disclosing to each other in any manner the substance of their own, or each other’s, or any other competing applicants’ bids or bidding strategies, or discussing or negotiating settlement agreements, until after the down payment deadline, unless such applicants are members of a bidding consortium or other joint bidding arrangement identified on the bidder’s short-form application pursuant to § 1.2105(a)(2)(viii).

Star’s authorized bidder was David Be-henna, and Northeast’s application listed Patrick Riordan as its authorized bidder. David Behenna began bidding for licenses on August 28, 2002. The same day, Be-henna left a voicemail message for Riordan, instructing Riordan to call him back if Northeast was not participating in the auction. As counsel for Star later explained, the condition that Riordan should only return the call if he was not participating in the auction was apparently meant to ensure that the two did not run afoul of the FCC’s anti-collusion rule — if Northeast was not involved in the auction, they believed, they would not be colluding if they talked to each other. Indeed, Northeast was ineligible to bid in the auction (recall that it had not paid the upfront fee), and thus Riordan returned Behenna’s call the next day. In a brief telephone conversation, Riordan informed Behenna that Northeast was interested in several Wisconsin markets at stake in the auction, and soon after the call Star began bidding on those markets. Because these markets were in areas that Star otherwise had no interest, presumably (and it is not denied) Star was bidding on Northeast’s behalf.

Both Star and Northeast reported the conversation to the FCC, pursuant to the regulation’s requirement that applicants self-report violations of the anti-collusion rule. 47 C.F.R. § 1.2105(c)(6). The FCC imposed a Notice of Apparent Liability for both companies and proposed $100,000 fines for each. The FCC subsequently issued forfeiture notices, finding that both companies had engaged in “collusive conduct during a Commission-conducted auction in 2002, in willful and repeated violation of section 1.2105(c).” 19 F.C.C.R. *1053 18,635 (2004). On May 4, 2007, the Commission denied the request for review by both companies, although it reduced the forfeiture to $75,000 in light of both companies’ past history of compliance. Star petitioned for review of the Commission’s decision in the D.C. Circuit Court of Appeals, and that court recently affirmed the Commission’s decision. Northeast did not join in that appeal, but the action brought in this Court by the United States raises several issues that mirror those raised in the D.C. Circuit proceeding.

II. ANALYSIS

Northeast brings several challenges to the FCC’s imposition of the forfeiture. The first two challenges posit that Northeast’s communication with Star did not violate the letter of the anti-collusion rule. Northeast also argues that the rule itself is impermissibly vague and that the rule, as interpreted by FCC staff, is unconstitutional. It raises a number of other arguments based on vagueness, and it further argues that the forfeiture is arbitrary and capricious because Northeast did not engage in “willful” or “repeated” violations of the rale. I address each of these arguments below.

A. Subject Matter Jurisdiction

On May 14, I directed the parties to submit supplemental briefs addressing the question of this Court’s subject matter jurisdiction over certain of Northeast’s defenses. Both sides have now stated their positions with respect to the jurisdictional question, and I conclude that this Court does have jurisdiction to consider the Defendant’s various challenges to the FCC’s rules.

The May 14 order outlines the jurisdictional issues involved. In short, based largely on an Eighth Circuit case, United States v. Any and all Radio Station Transmission Equipment, 207 F.3d 458, 463 (8th Cir.2000) (“Fried III”), I concluded that there was some question as to whether a district court could entertain facial challenges to the FCC’s rales without treading on the statute that provides for exclusive jurisdiction in the court of appeals. In particular, 28 U.S.C. § 2342 provides in part that “[t]he court of appeals ... has exclusive jurisdiction to enjoin, set aside, suspend ...

Free access — add to your briefcase to read the full text and ask questions with AI

Related

United States v. Baxter
841 F. Supp. 2d 378 (D. Maine, 2012)

Cite This Page — Counsel Stack

Bluebook (online)
608 F. Supp. 2d 1049, 2008 U.S. Dist. LEXIS 48960, 2008 WL 2563234, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-northeast-communications-of-wisconsin-inc-wied-2008.