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Great Northern Radio, LLC and VOX Vermont, LLC v. Nassau Broadcasting Holdings, Inc., Nassau Broadcasting, LLC, Nassau Broadcasting III, LLC, and Nassau Broadcasting Partners, L.P.
ORDER This action arises from a series of agreements, executed by the parties in 2004 for sale of ten radio stations from the Plaintiffs to the Defendants. One of these stations, WWOD, was licensed by the Federal Communications Commission ("FCC") to broadcast in Hartford, Vermont. The parties intended to seek a change of WWOD's community of license to Keeseville, New York. Because of the extra time needed to change WWOD's community of license, the parties agreed to split the $21 million Asset Purchase Agreement into two components. A payment of $18,000,000 was due at the time of the closing of the transaction and a second payment of $3,000,000 was due at the later of: 1) the closing of the stock purchase agreement between the Plaintiffs and the Defendants; or 2) the occurrence of the Federal Communication Commission's grant of a construction permit for the relocation of WWOD from Hartford, Vermont to Keeseville, New York; and execution of a transmitter lease for WWOD in Keeseville, New York. The administrative process for obtaining the necessary FCC approval for WWOD
was commenced by the parties in March of
but the administrative proceedings
have been contentious and are still pending. A third party, Hall, has opposed the transfer. Neither one of the conditions set forth in the 2004 agreement has yet occurred.
I. Procedural Background
Plaintiffs have filed this declaratory action seeking damages and other relief arguing that they are entitled to the $3 million dollar payment because the Defendants have breached their obligation to diligently pursue the grant of the petitions to move and construct the new WWOD by requesting rating of the Lebanon /Rutland /White River Junction market, failing to take any action to rectify errors in applications to the FCC after it was aware of the errors in the applications, and failing to timely file petitions and applications to the FCC. See, e.g., Petition for Declaratory Judgment, paragraphs 52, 57, 61. Specifically, Plaintiffs allege that Defendants knew at the time they requested a market rating, that the request would delay or prevent the WWOD move, and therefore allow the Defendants to refuse to make the final $3,000,000 payment. This case was consolidated on Plaintiffs' motion on November
20, 2004 with
another action pending in this court, Birch Broadcasting, Inc., et al. v. Capital
Broadcasting Corp., Inc., which involved many of the same parties. The Birch case was
tried in December 2009 and the parties, prior to trial, jointly moved, and the Court granted, a motion-to sever on Decemer
2009. There are a number of pending
motions, all of which involve the Plaintiffs' desire to take discovery.
A. The Defendant's Motion for Summary Judgment
The Defendants filed a Motion for Summary Judgment dated October 30, 2009. The Motion for Summary Judgment argues that as a matter of law the Plaintiffs cannot show that the delay in the FCC's granting of the WVVOD construction permit was caused by the request for "rating" of the Lebanon/ Rutland /White River Junction market as opposed to the objections of the third party competitor Hall. In their motion, Defendants deny there was anything wrongful about their request to rate the market or that they engaged in any other conduct in breach of their obligations to Plaintiffs. They state that even if all of the Plaintiffs' allegations of wrongful conduct are accepted as true, Plaintiffs cannot recover on any of their claims, since as a matter of law they cannot show any causal connection between that alleged misconduct and the FCC's lengthy delay in acting upon the transfer application. The Defendants' basic argument is that the records of the FCC proceedings themselves show that the agency's delay in issuing its decision had nothing to do whatsoever with the rating issue about which Plaintiffs complain. They argue that it is well settled that an administrative agency's deliberative process and the reasons for its actions can be established only by reference to its public acts and pronouncements, citing United States v. AT&T, 524 F.Supp. 1381, 1386-1387 (D.D.C. 1981). Shortly after it was filed, Plaintiffs sought to defer a ruling on the Motion. Because counsel for the parties in this case were preparing for trial in the related Birch matt- , at requesi of the Plaintiffs on November
20-09-, the Court ordered -that a
Response to the Defendants' pending Motion for Summary Judgment outlining the reasons why further discovery was necessary to respond to the motion on the merits should be filed by January 11,
Plaintiffs timely filed a Response and argued that
they needed the opportunity to take depositions to establish the factual allegations in the writ of summons. Plaintiffs' counsel also argued that "in addition to obtaining the factual information, Plaintiffs' counsel needs to work with one or more expert witnesses to demonstrate that the actions of the defendants to a reasonable degree of certainty caused the FCC to reject or delay the relocation application and that otherwise the application likely would have been granted." Plaintiffs' Preliminary Response to Motion for Summary Judgment, page 7. Plaintiffs stated they have identified at least one possible expert, David G. O'Neil, Esquire, an attorney specializing in FCC practice but "Mr. O'Neil cannot fully develop his opinions and testimony until the underlying facts have been clarified . . . ." Id. Plaintiffs do attach an affidavit of Mr. O'Neil to their papers in which Mr. O'Neil states that he was told by a FCC employee that an administrative hold had been placed on the approval process because of the FCC's concern about Nassau's non-compliance with multiple ownership rules, and Based on my discussion with FCC staff, as well as the FCC's prompt grant of the applications after divesture of stations, and based on my professional experience in FCC practice, I conclude that the delay in the applications from January 2007 until October 2008 was caused by the FCC's concerns about Nassau's non-compliance with the multiple ownership rules. Affidavit of David O'Neil, paragraph 13. On Feb. 5, 2005, Defendants filed a Reply, pointing out that Mr. O'Neil's affidavit did not address the vigorous third party objections to the approval request, and asserting that since Plaintiffs could not prove causation, the summary judgment motion was ripe for ruling. B. The Discovery Motions
Following the filing of that motion, Plaintiffs filed a Motion to Appoint Commissioners to take depositions and a Motion to Compel Discovery, and the Defendants objected. In objecting, the Defendants repeated the same arguments that they made in their Motion for Summary Judgment. Plaintiffs seek to take discovery to obtain information concerning the FCC's deliberative process and the reason for its decisions. Defendants argued that "such discovery is wasteful and irrelevant because... an administrative agency's deliberative processes and the reasons for its actions can be established only by reference to its public acts and pronouncements." Defendants' Objection to Plaintiffs' Motion to Appoint Commissioners, January 18, 1. Following this motion, a hearing was held on March 31, post-hearing memoranda. All of the pending motions turn on one issue: are the Plaintiffs entitled to prove, from evidence outside the official agency record, that the cause of the delay in approval was the Defendants' request for re-rating of a market?
and the parties filed
III. Controlling Law
It is generally true that an agency's actions must be determined from the public record. AT&T, 524 F.Supp. at 1387. But there are apparently rare circumstances in which a court could order disclosure of the mental processes of administrative officials who participated in a decision. See, e.g., Citizens to Preserve Overton Park v. Volpe, 401 U.S40-2, 42o (1971) overruled on other -grounds; Califano v. Sanders, 430 U.S. 99, 105 (1977). The Court believes, however, that in the vast majority of circumstances, the deliberative process privilege prevents a party from inquiring into the decision processes of government agencies. See generally Morley v. U.S. C.I.A.,
WL 1233381, *7-9'8
(D.D.C. 2010). While the New Hampshire Rules of Evidence do not address this privilege, the New Hampshire Supreme Court has recognized it, Society for the Prot. of
New Hampshire Forests v. Water Pollution Supply and Control Comm'n, 115 N.H. 192,
194-195 (1975), and in any event the availability of evidence from the FCC is likely an issue of federal law. At least in federal courts, the so-called deliberative process privilege provides protection from agencies for those documents which reflect advisory opinions, recommendations and deliberations that are part of a process by which government decisions and policies are formulated. Ascom Hasler Mailing Systems, Inc. v. U.S.
WL 143709, * 2 (D.D.C.
"The purpose of the privilege is
three-fold: first, it protects candid discussions within an agency; second, it prevents public confusion from premature disclosure of agency opinions before the agency established its final policy; and, third, it protects the integrity of an agency's decision, preventing the public from judging officials based on information they may have considered prior to issuing their final decision." Ascom, 2010 WL 143709 at * 2. See also
Trentadue v. Integrity Committee, 501 F.3d 1215, 1226 — 1228 (loth Cir. 2007)
(recognizing deliberative process documents exempt from the Freedom of Information Act); United States v. Zhen Zhou Wu,
WL 817324 (D. Mass. 2010); In re Methyl
Tertiary Butyl Ether (MTBE) Products Liability Litigation, 643 F.Supp. 2d 439, 441 —
442 (S.D.N.Y. 2009). ThPlairitiffs are entitled-to-file discovery requesagainst the -FCC-seelung documents which would prove their claim that the Defendants' request for re-rating of the market delayed the decisions relevant in this matter. It is likely that counsel for the FCC would take some action rather than complying. The Court will not issue an order
that the Defendants may not take discovery without hearing from the FCC; the FCC is doubtless quite able to articulate its own legal position and take whatever position it thinks proper with respect to what conduct it took or did not take. Indeed, it is likely that an attempt by a litigant to subpoena an FCC employee or FCC documents for use in a state court matter might be resolved in federal court. From the pleadings in the case, it does not appear that counsel for the Plaintiffs intend to seek discovery from the FCC. Rather, the Plaintiffs seek to obtain discovery regarding the basic facts of the case and then to have an expert witness testify about the effect of the actions taken by the Defendants. The Plaintiffs have suggested they will have an attorney who is an expert in FCC matters testify as to what steps the FCC would take if certain documents are filed. The admissibility of such evidence is a question of New Hampshire law. The question is ultimately one of relevance under New Hampshire Rule of Evidence 702. The Court is not persuaded that an attorney could testify as an expert about the reasons an agency took or did not take an action, in the absence of any documents which set forth the criteria for the actions the agency may take. Illustrative is American Marine
Rail NJ, LLC v. City of Bayonne,
289 F.Supp. 2d 569, 589 (D.N.J. 2003) in which the
court barred the testimony of a proposed expert who served in various positions in the mayoral administrations of David Dinkins and Edward Koch and based on his —higYprobability that the AMR-NTexperiences sought to (vine that "there is a very Bayonne location would have successfully negotiated a contract with the City of New York were it not for the fact that the project was killed by Hudson County in 1999." The Court stated that while the witness "may have general knowledge concerning solid waste
management issues in NYC, and the procurement process that the City utilizes, he has no specific or personal knowledge of the bidding and procurement process for the Request for Proposals to which plaintiff responded." Id. at 59o. Similarly, in United
States v. Rice, 52 F.3d 843, 847 (loth Cir. 1995), a trial court's finding that a witness
could not testify as expert was upheld by the loth Circuit which concluded that "he could have testified from his personal observations that the IRS had employed a procedure to `flag' certain cases or that files were sometimes lost but this is not the stuff of expert opinion." An attorney's testimony on what caused a agency to fail to act, based not upon written rules or procedures which can be checked and verified, but based upon his own or other attorneys' experience of what has occurred in similar cases is facially attractive, but is in fact an exemplar of the logical fallacy, post hoc, ergo propter hoc or, in
English, "after this, because of this". It is akin to arguing "illegal immigration in the United States has increased in the last 10 years; the average return on U.S. stocks has been lower than the historical average in the last ten years; therefore increased illegal immigration results in stock market returns which are below the historical average." The syllogism fails, because causation is overlooked. While an attorney may give an opinion on the legal consequences of certain acts where an attorney is asked to opine as a fact witness, in such cases the attorney must opine based on statutes and -cases. All- opinion on foreigritaw is based on-the written -lw of the foreign jurisdiction. United States v. Pre-Columbian Artifacts, 845 F. Supp. 544, 546 (N.D. Ill. 1993) ("While any determination as to foreign law is a legal question, any relevant material or source, including testimony, may be considered in establishing
foreign law. Commonly, oral or written expert testimony accompanied by foreign legal materials is provided."). The purpose of expert testimony [cases of foreign law] is to aid the court in determining the content of the applicable foreign law-not to apply it to the facts of the case." HTC Corp. v. IPCOM GMBH & Co., KG, 2009 WL 5908010 (D.D.C. 2009) (citations omitted). In HTC Corp., the Court concluded "to the extent [the expert] has merely stated what German law is, his declaration may be helpful to the Court. However, to the extent he has attempted to identify relevant facts and discuss the outcomes of the case, or to the extent his opinions appear partial to [one particular party], the Court may exercise its discretion not to consider his statements." Id.
Under the circumstances, the Court will not preclude the Plaintiffs from discovery on the issues addressed in the Defendants' summary judgment motion, if likely to lead to admissible evidence. If the Plaintiffs can establish that the Defendants breached their obligations under the APA, including the obligation of good faith and fair dealing, they may succeed. However, the Defendants will need to produce evidence that any breach of duty by the Defendants was causal, and under the cases outlined, the testimony of an expert witness, unless supported by orders and policy statements of the FCC would be inadmissible under Rule 702. The Court therefore directs the parties to meet and confer regarding a schedule for discovery and dates for depositions. The s Plaintiffs-rn-ayfile -a motion for appointment of commissioners in accordance with tffi---Orde. All pending motions regarding summary judgment and discovery: Defendants' Motion for Summary Judgment (Index No. 33); Plaintiffs' Motion to Appoint
Commissioners for Vermont and Virginia (Index No. 48); Defendants' Motion to Stay Discovery (Index No. 51); Plaintiffs' Motion to Compel Discovery and Objection to Motion to Stay (Index No. 52) are GRANTED, DENIED or MOOT to the extent consistent or inconsistent with this Order.
Richard B. McNamara, Presiding Justice
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