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RADIO CORP. OF AMERICA v. UNITED STATES

December 20, 1950

RADIO CORP. OF AMERICA ET AL.
v.
UNITED STATES ET AL.



Before Major, Circuit Judge, and Sullivan and LA Buy, District Judges.

The opinion of the court was delivered by: Major, Circuit Judge.

  This action was brought to enjoin and set aside an order of the Federal Communications Commission, adopted October 10, 1950, effective November 20, 1950, which promulgated standards for the transmission of color television. Plaintiff Radio Corporation of America (RCA) is engaged, among other things, in research and development work in the field of electronics, and particularly in the field of radio and television, as well as in the manufacture and sale of radio and television transmitting and receiving apparatus and parts. Plaintiff National Broadcasting Company (NBC) is engaged in sound and television broadcasting, including network broadcasting. Plaintiff Victor Distributing Corporation is engaged in the sale of articles and products manufactured by the Victor Division of RCA. Both this distributing company and NBC are wholly owned subsidiaries of RCA. The defendants are the United States and the Federal Communications Commission.

The complaint sought an interlocutory injunction until the further order of the court and a permanent injunction upon final hearing. The defendants moved for a summary judgment and a dismissal of the complaint on the ground that there was no genuine issue as to any material fact and that defendants were entitled to a judgment as a matter of law.

A three-judge court was convened, as required by Title 28 U.S.C.A. §§ 2284 and 2325. Or the issues thus presented, the matter came on for hearing and oral argument was heard on November 14, 15 and 16, 1950.

Prior to the time of oral argument, the Columbia Broadcasting System (CBS), also engaged in sound and television broadcasting, by agreement of the parties, was allowed to intervene in support of the Commission's order. Either during or previous to the ora argument, the following parties, over the objection of defendants, were permitted to intervene in support of plaintiffs' attack upon the Commission's order: Local No. 1031 of the International Brotherhood of Electrical Workers, representing 21,000 members, 18,000 of whom are employed in Chicago or vicinity in the manufacture of radio and television sets or in the manufacture of parts and in the assembling thereof; Pilot Radio Corporation; Emerson Radio and Phonograph Corporation; Wells-Gardner & Company, Sightmaster Corporation and Radio Craftsmen, Inc., all manufacturers of television receiving equipment; and Television Installation Service Association, a trade organization engaged in the business of servicing and installing radios and television equipment in the Chicago area.

The statutes involved with respect to the jurisdiction of this court are Title 28 U.S.C.A. §§ 1336, 1398, 2284, 2321-2325 and Sec. 402(a) of the Communications Act of 1934, as amended, Title 47 U.S.C.A. § 402(a). With respect to the legal authority of the Commission to adopt standards, the provisions of the Communications Act mainly involved are Secs. 4(i), 301, 303(b, c, e, f, g, r). Secs. 4(i) and 303(r) of the Communications Act endow the Commission with authority to make rules and regulations and issue such orders as may be necessary in the execution of its functions and to carry out the provisions of the Act. Sec. 303(b) authorizes the Commission, as the public convenience, interest or necessity requires, to prescribe the manner of the service to be rendered by stations, and Sec. 303(e) gives similar authority to regulate the kind of apparatus to be used with respect to its external effects. Sec. 303(g) provides, under the same standard of the public convenience, interest or necessity, that the Commission shall "study new uses for radio, provide for experimental uses of frequencies, and generally encourage the larger and more effective use of radio in the public interest."

As has been shown, there was before the court at the time of the hearing plaintiffs' prayer for an interlocutory injunction and defendants' motions for a summary judgment and for dismissal of the complaint. Numerous affidavits were presented by the plaintiffs as well as by the plaintiff-inter-venors, showing that irreparable damages would result if the order was permitted to take effect. Opposing affidavits were filed by the defendants and by CBS, the defendant-intervenor. There was also presented by the Commission a record of the proceedings, upon which its order was predicated.

At the conclusion of the hearing, the court took the conflicting motions under advisement and at the same time entered a temporary restraining order "restraining and suspending until further order of this court the promulgation, operation and execution of the order of the Federal Communications Commission adopted October 10, 1950, effective November 20, 1950." As a basis for this order the court entered findings of fact, including the finding, among others, that irreparable damages would result to plaintiffs and intervenors unless the Commission's order was restrained and suspended during the consideration and determination of the issues before the court, and that such temporary suspension would be in the public interest.

The order sought to be set aside has been the subject of attack on many fronts, which may be generally classified under two contentions, (1) that the order is contrary to the public interest, and (2) that its adoption represents an arbitrary and capricious attitude on the part of the Commission. Under these two general categories there are, of course, many subsidiary issues. The defendants concede that RCA has an interest which permits the maintenance of the instant suit, but that there is an absence of such interest on the part of the other plaintiffs, as well as on the part of the intervening plaintiffs. For the purpose of this decision, we shall assume that all the plaintiffs, as well as the intervenors, are properly before the court.

After listening to many hours of oral argument by able counsel representing the respective parties, we formed some rather definite impressions relative to the merits of the order, as well as the proceedings before the Commission upon which it rests. And our reading and study of the numerous and voluminous briefs with which we have been favored have not altered or removed those impressions. Also, in studying the case, we have been unable to free our minds of the question as to why we should devote the time and energy which the importance of the case merits, realizing as we must that the controversy can only be finally terminated by a decision of the Supreme Court. This is so because any decision we make is appealable to that court as a matter of right and we were informed during oral argument, in no uncertain terms, that which otherwise might be expected, that is, that the aggrieved party or parties will immediately appeal. In other words, this is little more than a practice session where the parties prepare and test their ammunition for the big battle ahead. Moreover, we must give recognition to our limited scope in reviewing an order of an administrative agency. While citation of authority in this respect is hardly necessary, it may not be amiss to make reference to a few recent Supreme Court opinions.

In American Telephone & Telegraph Co. et al. v. United States et al., 299 U.S. 232, 236, 57 S.Ct. 170, 172, 81 L.Ed. 142, wherein the court had under review an order of the instant defendant Commission, the court stated: "This court is not at liberty to substitute its own discretion for that of administrative officers who have kept within the bounds of their administrative powers. * * * it is not enough that the prescribed system of accounts shall appear to be unwise or burdensome or inferior to another. Error or unwisdom is not equivalent to abuse."

In Federal Security Administrator v. Quaker Oats Co., 318 U.S. 218, 227, 63 S.Ct. 589, 87 L.Ed. 724, the Court of Appeals for this Circuit set aside the order of an administrative agency. The Supreme Court reversed and with reference to review provisions of administrative action, stated: "Under such provisions we have repeatedly emphasized the scope that must be allowed to the discretion and informed judgment of an expert administrative body. [Citing cases.] These considerations are especially appropriate where the review is of regulations of general application adopted by an administrative agency under its rule-making power in carrying out the policy of a statute with whose enforcement it is charged." And further the court, referring to the judgment of the administrative agency, stated 318 U.S. at page 228, 63 S.Ct. at page 595, 87 L.Ed. 724: "That judgment, if based on substantial evidence of record, and if within statutory and constitutional limitations, is controlling even though the reviewing court might on the same record have arrived at a different conclusion."

More recently, in National Broadcasting Co., Inc. et al. v. United States et al., 319 U.S. 190, 224, 63 S.Ct. 997, 1013, 87 L.Ed. 1344, the court reviewed and sustained an order of the instant Commission, and in doing so stated: "The Regulations are assailed as `arbitrary and capricious.' If this contention means that the Regulations are unwise, that they are not likely to succeed in accomplishing what the Commission intended, we can say only that the appellants have selected the wrong forum for such a plea. * * * Our duty is at an end when we find that the action of the Commission was based upon findings supported by evidence, and was made pursuant to authority granted by Congress. It is not for us to say that the `public interest' will be furthered or retarded by the Chain Broadcasting Regulations. The responsibility belongs to the Congress for the grant of valid legislative authority and to the Commission for its exercise."

Thus, with our scope of review so firmly delineated, we turn to a brief statement, if that is possible, of the proceedings which culminated in the order under attack. The Commission for many years had considered the question of color television. CBS had formerly proposed a system, which was denied in 1947. The instant proceedings, or that part which related to color television, were initiated by the Commission's notice of July 11, 1949 of further proposed rule-making relative to color television. This notice proposed among other things to consider color television systems, provided that such systems met two criteria: first, that they operate in a six-megacycle channel (the frequency space allotted to black and white television broadcasting stations); and second, that the pictures be received on existing television receivers "simply by making relatively minor modifications in such existing receivers," and the notice provided, "following the closing of the record and the conclusion of oral arguments, the Commission upon consideration of all proposals, counter-proposals, and evidence in this proceeding will adopt such rules, regulations and standards as will best ...


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