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case number 20-1047 et al.

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Nalini Kapoor et al.

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Appellants versus Federal Communications Commission.

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Mr. Corbett for the appellants, Ms.

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Citrine for the appellee.

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Good morning.

[00:00:16] Speaker 02:
Good morning.

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Thank you for hearing this case.

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I am Dennis Corbett for the appellants Nalini, Rishi and Ravi Kapoor.

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We appreciate this opportunity as the last case on the court's oral argument schedule and calendar year 2020.

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I am actually glad for the opportunity to wear a coat and tie.

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Such chances are few in a pandemic.

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This is a case brought to this court pursuant to your exclusive jurisdiction under Section 402B of the Communications Act to your FCC licensing cases.

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We seek review of what the record shows to be unsustainable FCC failures to fulfill its obligations under Section 309 of the same Act.

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309's requirement of a hearing is satisfied when we present one or more substantial material questions of fact before the FCC in a licensing case.

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Such questions, of course, proceed from record evidence.

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Mr. Corbett, before we get to the merits, I want to talk about the possibility of moodness.

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As I understand it, you're asking for a station to be taken away from a company, OTA, that no longer owns it,

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and returned to a company, your client's former company, that no longer exists.

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How is that not a moot case?

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For the reasons we set forth in the reply brief to take the sale to TV 49 first.

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The record of the case makes clear that under the licensing scheme of 309, these cases can take time.

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I have followed the statutory roadmap in every case, whether it be reconsideration, applications for review, et cetera, which I must follow in order to get judicial review secured.

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During that period of time, if the target, OTA in this case, elects to sell the station to another party, in this case, TV 49, which elects to buy it, subject to the cloud on the title, which of course this case puts there, and which the FCC acknowledged in the decision, then all those parties are subject to unwind, including TV 49,

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and including OTA.

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That's boilerplate.

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That's got to be the case for a case like this, for this court not to be deprived.

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Who would we return the station to?

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Well, that's the next question to KXT LLC.

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That's a matter of California law, which was raised by the government in their brief.

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And in fact, it's a California dispute as to whether KXT LLC continues to exist.

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But the statute to which I cited the court, California 17707.06 makes clear that even if KXT attempts to unwind or dissolve,

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that it continues to exist for all purposes relating to that unwind.

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And in this case, Your Honor, OTA and KXT are parties to a signed unwind agreement by which they agreed in the event of a judicial overturn of the grant to OTA that they would unwind the transaction.

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So it's all buttoned down, it's all signed and agreed to.

[00:04:01] Speaker 01:
And the FCC acknowledged... So we can, I mean, at the end of the day, assume that KXT does not exist.

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At the end of the day, you think that the station can still be returned to a company that does not exist.

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the statute provides that it continues to exist, your honor.

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And what's that?

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And so I'll go, I will, I will go read it.

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The statute again, what can you remind me?

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What statute?

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It's California.

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It's 17707.06.

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We have a copy of it in the addendum to our reply brief.

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So you don't look, you know, you can find it there.

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And then the, the second buyer, the company that OTA sold to TV 49,

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They're not a party in this case.

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And so I wonder if we in the FCC are allowed even to do what you want us to do without any kind of due process violation or whether TV 49 is a party that has to be here before we can take their TV station away from them.

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Again, they elected not to.

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Before I get to that question, I wanted to point out as well, there's another provision in the California code that says no action or proceeding shall abate by reason of winding up or dissolution.

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That's also directly relevant to your question.

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There are two provisions in there, both the continuation.

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As to TV 49's election not to intervene, nothing prohibited them from doing so.

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Were they served?

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Yes.

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Can you tell me where in the record that is?

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I can't give you a site to that.

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That was as part of the service of our original petition.

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OK.

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But the commission put TV 49 on notice of what every applicant before the FCC to acquire a station license knows, namely that the FCC grant of the assignment

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did not require closing of that deal and that they closed at their risk, subject to the cloud on the title, which was the long pending claim by us that OTA lacked qualifications to acquire the station in the first place.

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So that's merely a risk assessments by TV 49.

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And then if everything were to go your way, if all of these legal questions were to be resolved in your favor, and then the station goes back to the original company,

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What happens then?

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That company then holds the license again and it would be part of the long winding up.

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But the majority owners of that company can still sell the station.

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Your clients are still minority shareholders.

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So even if you get everything you want from every court,

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in the 32 FCC filings that you've filed plus appeals and state arbitrations and state litigation, you get everything.

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And this goes to redressability and standing.

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You're still a minority shareholder in a company that's going to sell the station.

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Well, we don't know that, first of all, Your Honor, as to what they would do.

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Secondly, I'm pretty committed to selling the station.

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You've fought them for a while now.

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But I would suggest in response to your question on standing, just as I cannot establish standing in this court on the basis of a hypothetical injury, which I have not, I argued a concrete injury through the loss of a unique investment,

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This court cannot deny me standing on the basis of a hypothetical lack of injury down the road by something that may or may not happen.

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So I can't be whipsawed by hypothetical on the front end and then thrown out of court on the back end on the basis of a hypothetical.

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Mr. Corbett, you said that you have a concrete injury through the loss of

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The concrete injury to your clients at the time of the original sale to OTA was what?

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The loss of a unique investment in the station.

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But they were compensated for that, no?

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Well, it's a unique asset, as we cited in the brief.

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Right.

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So the LLC owns a unique investment.

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the majority decide to sell it, the minority shareholders object, and that was arbitrated about whether there was authority to sell.

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And that's been finally determined that there was authority to sell, right?

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And in fact, your clients were compensated for the sale of that investment and their proportional, the value to them of that investment.

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Right.

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Actually, Your Honor, we have not been compensated.

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No compensation whatsoever.

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I believe there's a small amount of compensation to Rishi Kapoor.

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Other than that, no.

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And why is that, if there are shareholders?

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That's a bit complicated, Your Honor, other than.

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In this case, a bit complicated?

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Hard to imagine.

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I appreciate that.

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The record does show that there was an escrow agreement created at the time of the original closing in 2014 and the money, the consideration was put into that account.

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At the same time, the unwind agreement was entered into.

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While there has been some distributions, my understanding to the majority shareholders, not necessarily a fact of record in this case.

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And that's because the Kapoor's refused to accept because they were afraid that it would affect the harm to them or that it would affect their ability to pursue a live claim?

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Again, I want to be careful about my representation of the facts concerning the lack of consideration.

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It's been a contentious matter throughout.

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It includes, it continues to be in terms of the release of the consideration to the Kapoor's from the original sale.

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And I think to go beyond that, I'm a little reluctant

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if only because I want to make sure my representations of the court are accurate.

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I can say it's a byproduct of a long contentious matter.

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And we have not been- Let me just back up.

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It's your burden in a situation like this to show an injury.

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It's your burden to persuade us that your client was injured.

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In the ordinary course, in the ordinary course, a non-majority shareholding stake

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is not in control of the sale decision, but does get pro rata remuneration when the business is sold.

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That would be in the ordinary course.

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And you're claiming here that nonetheless, assuming facts that aren't in evidence, but just to understand,

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Nonetheless, these minority shareholders would have preferred that the business not be sold and that the law, the FCC character requirement redounds to the benefit of the minority shareholders.

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Do we have any reason to think that they have a different level of voice on the character question

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more voice on the character question than they would on the sale itself?

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Well, again, this goes to the unique statutory scheme that's in front of this court under 309 and Communications Act.

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Any aggrieved person is permitted and the statute wants that aggrieved person to bring character issues to the commission's attention.

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We are certainly aggrieved by the loss of unique investment by the FCC's decision here to assign the license to an unqualified buyer.

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We have lost our unique investment as a result of that decision in this unique case, in this circumstance.

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That's what this case is about.

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It's not about a business dispute that's bubbled up from the district court.

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It's about the FCC's obligation to evaluate

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character qualifications of a buyer.

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And our case is predicated on a showing that this buyer is not qualified.

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And therefore, as a result of that FCC decision, we lost our unique investment.

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Your honor, I would point out, as I did in the briefing, that the very asset purchase agreement in this case by which the majority sold the station to the minority

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contains a provision on specific performance that talks about how the station is a unique asset and the loss is not compensable by money.

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And that's exactly our position as well, that our loss of our unique investment in the station is not compensable by money.

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Even if we had received a consideration that you asked me about, but which I told you we didn't get.

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But we as a court and the FCC as a tribunal is

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limited in what it can award, especially as Judge Walker was pointing out where the original LLC may no longer be in business.

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They exist, I understand, for the unwind purpose.

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So again, Judge Walker asked, in terms of redressability, you're envisioning an unwind

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goes from TV 49 back to OTA back to the LLC.

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The LLC in its nascent form says, okay, we're gonna have a character assessment of OTA, finds out OTA is terrible, ineligible, can't buy the station.

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And TV 49 says, nevermind, we're happy to buy it

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from the LLC for its market price.

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What redress does your client envision it's going to obtain given that that seems to me the most likely scenario?

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Again, Your Honor, that's a hypothetical that doesn't exist, may never exist, we don't know, but- It seems like it's the best hypothetical for your client.

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I want you to tell me the hypothetical that you're imagining that gets a robust redress.

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The hypothetical I'm referring to is the sale to TV 49 upon getting all the relief.

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I'm saying, what are you imagining?

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What are you envisioning is the relief that's more satisfactory?

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just the relief I'm seeking that our unique investment will have been restored.

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That's all this case- Restored to the LLC?

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Yes.

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And then what?

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Well then, and then we'll see what happens.

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I don't- What are you envisioning?

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I mean, you need to be concrete with us because as Jeff Walker asked, if the LLC is there only in its nascent form because it's legally required to be

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able to participate in an unwind.

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It's not going to go back into business and

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Or is that what you're envisioning?

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I just wanna know what you're envisioning.

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I'm envisioning that it will because there's California litigation that's seeking to restore it to business and that's pending and the result we don't know.

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But if you're asking for my best case, yes, the KXT LLC will be restored to business.

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The cancellation will not hold and nor will the dissolution.

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And they'll be back in business operating the station again.

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That's my best case.

[00:16:14] Speaker 03:
That seems highly conjectural.

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I mean, one of the inquiries we have to make in assessing standing is whether something is likely or speculative.

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And the notion that a company that long ago sold this asset would not sell it to a ready, willing, and able buyer that does meet a character standard

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seems conjectural, but you can tell me what I'm missing and so surmising.

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Well, the relief that I'm seeking, which is the restoration of the license to KXT LLC, that's what the case is about.

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That's not conjectural.

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What you're asking about is conjecture beyond that, which again, as I said, can't be used to defeat me at the back door.

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It's a front door question about hypothetical injury.

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We have been injured by the concrete loss of our investment.

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We're seeking its restoration.

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That's what the case is about.

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For this court to then go- No, you've been injured by the loss of your investment because the only claim here is the character claim.

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You've been injured by the loss of your investment to a buyer of bad character.

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And if a buyer of good character purchased, you would have no harm.

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Because this is a claim only about the FCC's failure to make character determination.

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The FCC is not in a position to say, and therefore this asset cannot be sold.

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It can be sold by the majority shareholders to anybody of good character on your theory.

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That's not the relief I'm asking.

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That's not the relief I'm asking.

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It may be the most relief you're legally entitled to.

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I'm giving you every benefit of the doubt and saying, terrible character of OTA, disaster, can't hold.

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OK, unwind all the way back to the LLC.

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But nothing about your claim, which is a character claim, prevents the LLC from selling to the next willing buyer of impeccable character.

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But with the return of the station to KAXT, the injury has been redressed.

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You're then talking about subsequent events, which may create a new issue, but my injury has been redressed.

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The asset, the license has been returned to KAXT LLC, and that has redressed my injury.

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As minority owners, we have reclaimed the investment.

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And so to spin it out beyond that and imagine what might happen in the future is hypothetical and I don't believe defeats my redressability showing.

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because the relief has redressed my injury in this case.

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There may be another case as to what happens in the future with another sale, but that's not this case before this court.

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I suppose the concern here, though, is that this is not the usual type of Article III question where we don't know what would happen among these various, I'll call them parties.

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We do know.

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because we know OTA sold to TV 49.

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And while they both took the title at the risk, we know what's happening.

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So this is not a question of deferring to your allegations about what would happen.

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We know what would happen.

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And- I'm sorry, I'm not understanding.

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We know what would happen when?

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We know what happened in this case all the way to the sale to TV 49.

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And I thought what Judge Walker was trying to focus you on is that those are the facts before this court in terms of not to put words in his mouth, but one way to

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assess whether or not your clients have likely been injured.

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And then Judge Pillard came forward pointing out how minority shareholders are normally taken care of.

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It's not as though your clients own the station, or it's even your client's company that owns the station, if you win down the road, as I understand it.

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My clients, though, had a 42% concrete investment in the station, and they lost that unique investment.

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It's unique, Your Honor.

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It's unique investment and unique asset.

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But the market can value even unique things.

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It does every day.

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It values ballet tickets.

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It values works of art.

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It values psychotherapists.

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It values all kinds of unique services and assets.

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And it valued this one.

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And the contract by which it was sold contains a provision, Your Honor, to which we cited that it's a unique asset.

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A TV station is a unique asset, the loss of which is not compensable by money.

[00:21:33] Speaker 02:
That's in the specific performance provision that we cited in the brief.

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It's a unique asset, the loss of which is not compensable by money.

[00:21:41] Speaker 01:
Is it a loss to your clients or was it a loss to the LLC?

[00:21:47] Speaker 01:
You keep saying that your clients owned 42% of the station and maybe as a practical way of looking at it, they did, but is it, tell me why I should not think about it like this.

[00:21:59] Speaker 01:
Your clients owned 42% of a company and that company had an asset.

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Company could have had a thousand assets and the company sold an asset.

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At the end of that sale, your clients still owned 42% of the only thing they ever directly owned, the LLC.

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Which owned the unique asset.

[00:22:26] Speaker 02:
And you're on it to your point.

[00:22:27] Speaker 01:
You keep saying unique asset.

[00:22:29] Speaker 01:
Let's imagine that your clients own 42% of the company.

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And that company had as its assets 1,000 pieces of art.

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And the company sold one of the pieces of art.

[00:22:40] Speaker 01:
And then after that, they own 999 pieces of art plus a million dollars, because the piece they sold was worth a million dollars.

[00:22:49] Speaker 01:
Before all that stuff happened, your clients had 42% interest in a company that was valued at, let's say, a million times a thousand.

[00:22:57] Speaker 01:
And at the end of the sale, your clients owned 42% of a company whose assets still equaled a million times a thousand.

[00:23:08] Speaker 01:
So I'm not sure how,

[00:23:11] Speaker 01:
minority shareholders in a company that were minority shareholders before an asset was sold and minority shareholders after the asset was sold have been injured when their stake in the company and the value of the company has not changed.

[00:23:26] Speaker 02:
Because, again, this is a case, again, brought under a unique Communications Act scheme in which under 309, aggrieved persons are entitled to bring character qualifications issues to the commission's attention.

[00:23:40] Speaker 02:
And that then needs to be reviewed by this court.

[00:23:42] Speaker 02:
The idea that actual owners of a company lack standing to challenge the qualifications of a buyer and are not aggrieved persons under the Act and

[00:23:55] Speaker 02:
and has standing under general standing principles, I think.

[00:23:58] Speaker 01:
You're leaving out a prepositional phrase, unique owners of a company that itself owns a station.

[00:24:11] Speaker 01:
They still own 42% of the company.

[00:24:13] Speaker 01:
After all this stuff happened that they didn't like, they still own 42% of the company and the company's value was the same as it was before.

[00:24:22] Speaker 02:
And of course they invested in the company as the record shows because they wanted to have a ownership interest in a TV station.

[00:24:30] Speaker 03:
Right, which is a huge disappointment to them, but that's been resolved in the arbitration.

[00:24:34] Speaker 03:
Let me ask you, you've pointed to the any aggrieved person, sort of the broad claim available to raise character defects.

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So the harm,

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that that provision guards against is not the shareholders protection of unique assets, but presumably a public interest in preventing bad apples from holding scarce and important broadcast licenses, right?

[00:25:13] Speaker 03:
We don't want companies of poor character as the law defines

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that to own valuable and unique assets like broadcast licenses, right?

[00:25:29] Speaker 02:
I agree with that, your honor.

[00:25:30] Speaker 03:
So that is the harm that the claim that your clients have raised is available to redress.

[00:25:40] Speaker 03:
Now there is no

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ownership by the company that you have persistently identified as such a bad apple.

[00:25:51] Speaker 03:
Why is that not full redress of the injury, this particular injury that you've raised?

[00:26:03] Speaker 03:
The injury cognizable by the character provision of the broadcaster.

[00:26:09] Speaker 02:
Well, because, again, I don't want to sound, I know I may sound repetitive, but we've lost the unique investment that they intended to and did secure in a television station, the owner of a television station, the owner of a television station.

[00:26:25] Speaker 02:
And, and I want to I want to, because I, because the focus has been on standing and I understand the court's concerns are withstanding.

[00:26:34] Speaker 02:
There is the alternate showing that we made as to viewership.

[00:26:39] Speaker 02:
And I understand the argument the other way viewership plus what.

[00:26:44] Speaker 02:
If we leave aside for a moment, the standing which I believe we have as as owners, which in 309 cases is unusual, it's unusual to find owners in 309 cases at all but we're also viewers.

[00:27:00] Speaker 02:
and programmers of the station.

[00:27:02] Speaker 02:
Ravi Kapoor, as the record shows, had the rights to have DiaTV, a channel that he owns and programs on KXT, LLC.

[00:27:14] Speaker 02:
And the first thing that OTA did upon acquiring the license was throw them out of the station and take them off the air.

[00:27:24] Speaker 02:
So the injury is not limited to the loss of that investment.

[00:27:30] Speaker 02:
The injury also goes to the loss of a program channel owned by Ravi Kapoor.

[00:27:36] Speaker 03:
And again- But is any of that the object of the character provision of the communication site?

[00:27:45] Speaker 03:
It would seem to me that you have a nexus problem in showing that the harms that you are identifying, which may be concrete, that they are caused by or

[00:27:59] Speaker 03:
maybe more vividly that they could be redressed by the remedy that you're seeking.

[00:28:08] Speaker 02:
I think those showings of viewership and loss of DATV carriage are a classic type of showing in a 309 case.

[00:28:17] Speaker 02:
Viewership goes back to, they cite the Rainbow Push cases, with which I know Judge Rogers is familiar.

[00:28:24] Speaker 02:
They go back

[00:28:25] Speaker 02:
a little bit in time, but those cases stand for the proposition that viewership plus what?

[00:28:32] Speaker 02:
Well, in this case, plus the loss of DATV carriage, which is a programming link to this case.

[00:28:39] Speaker 02:
So my view, injury and concrete injury abounds in this case.

[00:28:45] Speaker 03:
But those cases were not about the character of

[00:28:49] Speaker 03:
of the sale or purchase party, right?

[00:28:52] Speaker 02:
Yeah, they were, the rainbow push were challenges to buyers and the sale of a station because the seller, you know, they had to do with the viewership discrimination.

[00:29:06] Speaker 02:
They were discrimination cases for the most part, but they had to do with the character.

[00:29:10] Speaker 02:
A character was very much at play in those cases.

[00:29:13] Speaker 02:
And the question is, what makes for an aggrieved party under 309?

[00:29:22] Speaker 02:
And not only are we owners of a unique asset, but we're viewers that lost the programming channel as a result of the sale to an unqualified buyer.

[00:29:32] Speaker 02:
I mean, again, that's ultimately what 309 is designed to allow, aggrieved parties to bring character qualifications to the FCC's attention.

[00:29:42] Speaker 02:
in a licensing proceeding.

[00:29:44] Speaker 02:
And that's exactly what happened here.

[00:29:46] Speaker 02:
And we have shown multiple ways, established multiple grounds for standing under all three tests, injury, traceability, and redressability.

[00:30:01] Speaker 04:
All right.

[00:30:01] Speaker 04:
Why don't we hear from the FCC, and then we'll give you some time.

[00:30:06] Speaker 00:
Thank you, Your Honor.

[00:30:10] Speaker 00:
Good morning, Your Honors.

[00:30:11] Speaker 00:
May I please the court?

[00:30:12] Speaker 00:
I'm Sarah Citron for the FCC.

[00:30:15] Speaker 00:
And in our view, although Mr. Corbett has said this is not a business dispute, that's exactly what this case is.

[00:30:24] Speaker 00:
In arbitration and state court proceedings, the Kapoors lost their bid to prevent their former business partners from selling the station, the unique asset,

[00:30:34] Speaker 00:
They then sought to forestall that sale by bringing before the FCC a series of character complaints against OTA, the purchaser.

[00:30:44] Speaker 00:
The commission reasonably found that none of those allegations warranted an evidentiary hearing.

[00:30:52] Speaker 00:
And although there are numerous grounds on which this court could affirm that decision on the merits, it lacks jurisdiction to do so because the Kapoor's lack standing and

[00:31:03] Speaker 00:
I'll turn, if I may, to the standing issues first.

[00:31:07] Speaker 01:
Do you also think they lack mootness?

[00:31:10] Speaker 01:
Sorry, do you also think that the case is moot?

[00:31:14] Speaker 00:
Well, your question about mootness, I think, encompassed two problems.

[00:31:19] Speaker 00:
One was the redressability issue that the LLC has been dissolved, and that's the way we view this case.

[00:31:25] Speaker 00:
We haven't pressed

[00:31:27] Speaker 00:
the position that the transfer of TV 49 rendered the case mood or I guess it happened before the case started.

[00:31:37] Speaker 00:
So maybe that would be a question of standing.

[00:31:39] Speaker 00:
But in any event, we don't dispute that.

[00:31:43] Speaker 00:
if for some reason the Kapurs were to prevail in this case, which there's no reason they should on the merits, the TV49 transaction could hypothetically be unwound.

[00:31:56] Speaker 00:
But the redressability issue of the dissolved LLC is a real problem for the reasons I think the court, some of the reasons some of you have articulated,

[00:32:09] Speaker 00:
which is to say, I think, as Judge Pillard recognized, no matter the legal status of the LLC to unwind or pursue litigation, causes of action that may have existed before the start of this appeal,

[00:32:25] Speaker 00:
At no time in the course of this appeal has the LLC been in a position to operate as a going concern, which it would need to do to function as the licensee of this station.

[00:32:40] Speaker 00:
And that remains true today.

[00:32:41] Speaker 00:
There was a lawsuit that was filed after the FCC filed its brief in this case and pointed out the dissolution of the LLC.

[00:32:50] Speaker 00:
But

[00:32:51] Speaker 00:
not only is the result of that litigation speculative, and I think I would agree that the most likely, it doesn't seem likely to succeed, but whatever the likelihood of that suit, what matters for purposes of the standing analysis is, were these injuries redressable at the time this appeal was initiated or at any time in the course of this case?

[00:33:15] Speaker 00:
And because the LLC is not in existence as a going concern, they aren't redressable.

[00:33:21] Speaker 01:
I have a please Judge Rogers.

[00:33:24] Speaker 04:
Thank you.

[00:33:25] Speaker 04:
What about counsel's argument about the nature of section 309 that necessarily you want minorities shareholders to be able to appear before the commission when the challenge is

[00:33:50] Speaker 04:
based on character.

[00:33:55] Speaker 04:
So in other words, in that scenario, why don't we look at the question of standing from his client's perspectives and section 309.

[00:34:10] Speaker 00:
Your Honor, in our view, that approach would be contrary both to the shareholder standing doctrine and to this court's decisions concerning audience standing.

[00:34:24] Speaker 00:
It seems to suggest something even broader than the idea of automatic audience standing, which this court in the 2003 Rainbow Push case unequivocally

[00:34:37] Speaker 00:
made clear that there is no such thing as that broad automatic audience standing.

[00:34:43] Speaker 00:
And with respect to the minority shareholders, before this court, setting aside any issues of administrative standing, this court

[00:34:58] Speaker 00:
doesn't allow minority shareholders to vindicate rights that belong to the corporation, here, the LLC.

[00:35:09] Speaker 00:
And what the Kapurs have said is that they are seeking to vindicate their ownership interests.

[00:35:15] Speaker 00:
And there is no distinction between their ownership interests and the LLC's ownership interests.

[00:35:22] Speaker 00:
They have only a derivative interest.

[00:35:24] Speaker 00:
And in that case,

[00:35:25] Speaker 00:
there's no reason that they should be able to stand in the shoes of the corporate entity.

[00:35:34] Speaker 03:
I was surprised to see so little case law on that point because it seems coherent to say that whatever interest is being asserted as concrete and supportive standing would have to be an interest that minority shareholders themselves are legally

[00:35:55] Speaker 03:
You know, capable of asserting and the notion that they can't assert an ownership interest like it would seem like there would be dozens of cases on that, but I didn't see a lot of case on that.

[00:36:07] Speaker 03:
It seemed actually quite thin.

[00:36:08] Speaker 03:
We have this Ninth Circuit case and so what's up with that?

[00:36:16] Speaker 00:
You know I'll acknowledge Judge Pillard I had something of that reaction myself, and it may have to do with just a different factual, you know the ways that these cases present themselves factually they're not always.

[00:36:30] Speaker 00:
maybe the volume of them is not sufficient, at least in the FCC context, to produce a line of cases that are directly analogous.

[00:36:38] Speaker 00:
But there are a number of unpublished decisions in this court, that K versus FCC, Bob Law versus FCC, that I think are consistent with this more abstract principle of not allowing third party standing, which I think is, you know,

[00:37:00] Speaker 00:
really clear, if not factually in all fours, the franchise tax case, the Supreme Court case makes clear that

[00:37:09] Speaker 00:
that a minority shareholder in the Kapoor's position should not be able to pursue these, to rest on the idea that their concrete injury is an ownership interest that actually belonged to the company.

[00:37:25] Speaker 00:
And I think one of you was pointing out, too, there is a bit of a causation issue where, Judge Walker, your point was, and I think it's correct,

[00:37:36] Speaker 00:
At the start of this case, or at the start of the FCC proceeding, the Kapurs had a 42% ownership interest in the LLC.

[00:37:45] Speaker 00:
And at the end of the FCC's proceeding, they did as well.

[00:37:49] Speaker 00:
The sale was really a function, a contractual, it was a function of their minority interest in the LLC.

[00:37:58] Speaker 00:
And it's not something that arose from the FCC's decisions.

[00:38:02] Speaker 00:
If the court is struggling with the abstract concepts of shareholder standing or audience standing and what is enough of a nexus, and I think, by the way, that Mr. Corbett hasn't established a nexus between the Kapoor's asserted role, and it's really Ravi who has attested that he's a viewer of the station, but there's no connection between that interest, that viewership interest, that public interest,

[00:38:30] Speaker 00:
and the private interests that Mr. Kapoor has asserted, and again not attested to, but asserted in as DIA TV's founder and as someone who is interested in the programming of DIA TV.

[00:38:45] Speaker 00:
But all of that, all of those difficulties are swept aside by the redressability problem, which is that

[00:38:52] Speaker 00:
you know, whatever, as Judge Pillard put it, if the Kapurs were to get everything they wanted here and if OTA were a bad actor and the FCC had acted irrationally, there's still no way to restore this station to KAXT LLC as licensee.

[00:39:13] Speaker 03:
Is there a simpler way to look at that?

[00:39:14] Speaker 03:
I mean, it seems even

[00:39:17] Speaker 03:
maybe more than the character provision and the broad availability of a character claim is there to remedy to think about ownership interests.

[00:39:35] Speaker 03:
I mean, the harm, it's there because the Congress thought that it would be a public problem for bad apples to own broadcast licenses.

[00:39:48] Speaker 03:
And it seems in a way neither here nor there, whether someone who is claiming a transfer to an owner of ineligible character has any other concrete interest or help us out with that.

[00:40:05] Speaker 03:
Like in a way it just feels like it relates to a different claim to worry about the ownership interest, but maybe that's too cut and dried.

[00:40:18] Speaker 00:
I think that's a good question.

[00:40:24] Speaker 00:
has an informal objection vehicle also, which is partly what was at issue in this case, where I think parties that might not be able to, that may not have a concrete injury could object and bring issues to the commission's attention.

[00:40:42] Speaker 00:
But I don't, you know, again, I wanna be clear not to confuse here the requirements of administrative standing and judicial standing.

[00:40:51] Speaker 00:
I think it's,

[00:40:52] Speaker 00:
very clear under Section 402 that a party aggrieved is someone who meets the elements, the three standard elements of Article III standing and the courts just can't proceed in this case unless they can satisfy all three of those which they haven't.

[00:41:09] Speaker 00:
I see my time is up.

[00:41:12] Speaker 00:
If I could briefly make just a couple of general points about the merits, because I think we easily win there, I'd like to emphasize that this isn't a case, as the Kapoors have represented, where the Commission ignored their allegations against OTA.

[00:41:28] Speaker 00:
The Commission looked at these, took them seriously, addressed them in a number of opinions, as Judge Walker alluded.

[00:41:35] Speaker 00:
And so that's just not this case.

[00:41:39] Speaker 00:
And in addition, the issue here is really, did the commission reasonably determine or was it irrational in deciding that no evidentiary hearing was required on any of these allegations?

[00:41:54] Speaker 00:
And that's a question of internal FCC process of a kind to which this court gives the commission considerable deference.

[00:42:02] Speaker 00:
And at bottom, I would just say that on none of the five issues have the Kapoor's come close to showing that the commission's reasons, which it explained were arbitrary and capricious.

[00:42:15] Speaker 03:
I think the concern is what is the, I mean, what is the narrowest ground on which standing might be available to even reach the merits and

[00:42:32] Speaker 03:
It's a little bit tricky.

[00:42:35] Speaker 03:
I think it's probably lack of redressability rather than lack of harm.

[00:42:42] Speaker 00:
Well, of course, we maintain that there's no harm either.

[00:42:46] Speaker 00:
But I don't disagree that there's clearly no possibility of redress.

[00:42:52] Speaker 00:
And that might be the most straightforward path for the court.

[00:42:55] Speaker 01:
Ms.

[00:42:56] Speaker 01:
Citron, another straightforward path

[00:43:02] Speaker 01:
is that every petitioner has a duty to show that we have jurisdiction.

[00:43:12] Speaker 01:
That means they have a duty to show standing.

[00:43:15] Speaker 01:
In the petitioner's blue brief, they did not show that they had standing.

[00:43:24] Speaker 01:
They didn't even try.

[00:43:25] Speaker 01:
Instead, they put it not in their brief, but they put it in an addendum.

[00:43:32] Speaker 01:
which allowed them to exceed the page limit.

[00:43:36] Speaker 01:
Now they cite a DC circuit checklist on the DC circuits webpage, which says that they can do that.

[00:43:46] Speaker 01:
Of course, a webpage cannot override a circuit rule.

[00:43:54] Speaker 01:
Do you think that because

[00:43:56] Speaker 01:
The web page seems to say that they can do what they did, that we should allow them to do what they did or do you think we should stick with the actual rule, in which case we wouldn't even read their standing argument and in which case they haven't showed standing.

[00:44:11] Speaker 00:
Well, Your Honor, that is our view that it was an improper use of the addendum.

[00:44:16] Speaker 00:
It took them over the word limit.

[00:44:19] Speaker 00:
And so certainly, if that's the path the court chooses, we think that's viable.

[00:44:26] Speaker 01:
What's your best argument for why it's fair for us to do that and not unfair, considering we do have this web page that says maybe they can do it?

[00:44:37] Speaker 00:
Well, I think that by their own admission, they use this vehicle too, because they otherwise wouldn't have had enough words to make their showing.

[00:44:47] Speaker 00:
I believe we pointed to that in the footnote of our brief addressing.

[00:44:52] Speaker 01:
They're dueling footnotes on it.

[00:44:55] Speaker 01:
And I'm good.

[00:44:55] Speaker 01:
I don't have any more questions along with this.

[00:44:57] Speaker 01:
I just wanted to hear your thoughts on the fairness question.

[00:45:01] Speaker 00:
Certainly.

[00:45:03] Speaker 00:
If there are no further questions,

[00:45:06] Speaker 00:
I respectfully ask that the court dismiss the appeals or in the alternative, deny them.

[00:45:11] Speaker 00:
Thank you.

[00:45:12] Speaker 04:
Thank you.

[00:45:14] Speaker 04:
All right.

[00:45:14] Speaker 04:
Counsel for petitioners.

[00:45:17] Speaker 02:
Thank you, Your Honor.

[00:45:18] Speaker 02:
A couple of points on redressability, which was addressed at the very... Well, first, let me address Judge Walker's point about the strict application of the rule.

[00:45:32] Speaker 02:
Our brief was under the word count and we simply, for the court's convenience, put the standing showing rather than bifurcated as that rule would suggest, strictly bifurcated.

[00:45:45] Speaker 02:
We simply put it all in one place for the court's convenience.

[00:45:48] Speaker 02:
I think it would be an incredibly harsh result to read that rule as concluding this case because of the form in which we presented our standing showing.

[00:45:56] Speaker 02:
I would point out that even in the text of the brief in case 1048, we do address the standing argument briefly as well there.

[00:46:08] Speaker 02:
The entire standing showing and the three prongs are certainly shown in the brief in the 1048.

[00:46:18] Speaker 02:
So we were following what we understood to be court guidance on that, and it was not a device to exceed the word limit.

[00:46:26] Speaker 02:
Even the government concedes that you could bifurcate it, and we could simply bifurcate if the court felt that was important for some formal reason.

[00:46:35] Speaker 02:
I want to talk, realize that there was no

[00:46:41] Speaker 02:
finding of a standing problem below.

[00:46:43] Speaker 02:
The commission never challenged our standing.

[00:46:46] Speaker 02:
OTA never challenged our standing.

[00:46:49] Speaker 02:
I believe because it was self-evident.

[00:46:51] Speaker 02:
One of the things I didn't point out earlier was that, again, these are particularized cases involving the Communications Act and FCC processes.

[00:47:01] Speaker 02:
The Kapurs, as owners of an LLC, were actual parties to the FCC application itself, which is the subject of this appeal.

[00:47:11] Speaker 02:
They're parties to the application.

[00:47:12] Speaker 02:
And that's because the FCC views LLC members, regardless of their percentage, as having enough influence as to matter for FCC purposes.

[00:47:21] Speaker 02:
So I believe that

[00:47:24] Speaker 02:
there was no challenge to our standing from the beginning because it was self-evident that as owners of the facility, owners of the licensee of the facility, that our standing was self-evident.

[00:47:37] Speaker 02:
So it wasn't challenged.

[00:47:38] Speaker 02:
Again, as a party to the application, the commission and this court should actually welcome

[00:47:52] Speaker 02:
parties bringing character issues to the floor and bringing them to this court for review to make sure that the FCC is upholding its obligations as spectrum steward.

[00:48:02] Speaker 02:
I strongly disagree with with opposing counsel's representation.

[00:48:06] Speaker 02:
The Commission did everything right here.

[00:48:08] Speaker 02:
In fact, under motor vehicles, the tests, three tests, they did practically nothing right in our view as the brief shows.

[00:48:15] Speaker 02:
Their decisions run counter to the evidence in front of the agency.

[00:48:19] Speaker 02:
They're entirely failed to consider important aspects of the problems.

[00:48:23] Speaker 02:
And they offered rationales that are so implausible as not to survive judicial review.

[00:48:27] Speaker 02:
So we differ strongly on that.

[00:48:29] Speaker 02:
I understand the court's focus.

[00:48:30] Speaker 03:
What's the time period, Mr. Corbett, the perspective from which we evaluate your client's standing?

[00:48:36] Speaker 03:
Typically, when we get a case from an agency, we look at the standing.

[00:48:39] Speaker 03:
I believe at the time, they come to court because the standing only applies

[00:48:45] Speaker 03:
to the Article III tribunal.

[00:48:47] Speaker 03:
In this situation, is that the right temporal framework, or is it something else, and if so, why?

[00:48:53] Speaker 03:
Now, there's reassess standing as of a particular time.

[00:48:58] Speaker 02:
I don't think so.

[00:49:01] Speaker 02:
Based on, for example, the Stolls case, other cases, just disability and issues can arise later than the filing of a brief.

[00:49:11] Speaker 02:
This court always needs to satisfy itself with standing.

[00:49:16] Speaker 02:
So I don't believe that there's a hard and fast, bright line at the time of establishing standing.

[00:49:22] Speaker 02:
You need to have standing

[00:49:24] Speaker 02:
The time you file and I need to have standing today which I believe I've shown.

[00:49:27] Speaker 02:
I didn't want to add on redress ability that, again, the issue before this court is whether the injury in this case is redressable in this case.

[00:49:37] Speaker 02:
not in some other case down the road, not in the future, not based on what might happen, but what will happen in this case.

[00:49:44] Speaker 02:
And there's no contesting even by a government council that the unwinds could be ordered and the license restored to KXT LLC.

[00:49:53] Speaker 02:
That's what this case is about.

[00:49:55] Speaker 02:
And I understand you have speculations about another case down the road about what might happen in the future there, but that's a hypothetical at the back door that can't defeat my standing when I have shown a concrete injury at the front door, namely the loss of our unique investment.

[00:50:12] Speaker 02:
So I think it would set, and to your point about the lack of minority shareholder cases, I think that's highly relevant as well.

[00:50:20] Speaker 02:
They cited IACOPI, but of course IACOPI expressed the decline to find that a minority shareholder lacks standing based on court liberalization of standing principles.

[00:50:31] Speaker 02:
And I think it sends, any holding to that effect would simply shut the doors of the court for reviewing agency action.

[00:50:39] Speaker 02:
I don't see why the court would wanna do that in this case.

[00:50:43] Speaker 02:
This court should be,

[00:50:45] Speaker 02:
sitting in review of FCC's failures as spectrum stewards.

[00:50:49] Speaker 02:
That's what the Communications Act envisions.

[00:50:53] Speaker 02:
That's what 309's express language is all about.

[00:50:55] Speaker 02:
Agree persons.

[00:50:56] Speaker 02:
We're agree persons in multiple ways.

[00:50:58] Speaker 02:
As I said, injury abounds.

[00:51:00] Speaker 02:
We have multiple injuries we brought to this court's attention.

[00:51:03] Speaker 04:
All right.

[00:51:04] Speaker 04:
We will take the case under advisement.

[00:51:06] Speaker 04:
Thank you.