D.C. Circuit grants one aspect of stay request, leaving the Incentive Auction on track

For the time being, the Incentive Auction is still on track: the U.S. Court of Appeals for the D.C. Circuit has granted the stay request of Latin Broadcasters of Daytona Beach, LLC. Wait – the auction is on track, but the stay request was granted? How can that be?

Smart lawyering.

As readers will recall from our earlier post on the Latina request, Latina gave the Court two alternative choices: first, Latina asked the Court simply to stay the effectiveness of the FCC’s order excluding Latina from the auction; alternatively, it asked the Court to stay the auction. The Court went with Latina’s Plan A. As a result, the Commission will have to include Latina’s station among the stations eligible for the auction — at least until the Court gets to consider Latina’s appeal on the merits. (In other words, Latina is not entirely out of the woods yet; if it loses its merits appeal, it will presumably not be permitted to enjoy whatever rewards it might get from its provisional participation in the auction. Look for a merits decision sometime in the fall, probably.)

Why was that smart lawyering? Because, while a blanket stay of the auction would have solved Latina’s problems, it would also have messed up a whole boatload of other folks who really, really want the auction to happen sooner rather than later. While the Court might have been sympathetic to Latina’s plight, it might not have been so sympathetic as to warrant disappointing that boatload of folks. So the narrower alternative – just letting Latina in – was an easy way for the Court to help out somebody who needed help while not causing problems for everybody else.

Interestingly, to get to its decision, the Court waded into the FCC’s auction database (don’t try this at home!) and determined that Latina’s station had already been included there. That being the case, the Court said that it “expects that this order will not cause the auction to be delayed”. So the auction can go forward, but Latina has to be included.

In other words, a win-win!

But the FCC is still not entirely out of the woods. Readers will recall that the Videohouse Three have also requested a stay, but their request afforded the Court no limited alternative. Rather, they argued that the auction as a whole has to be stayed, period. That request is still pending (before the same three-judge panel as Latina’s case), although court watchers expect a decision in the very near term.

What (if anything) does the action in the Latina case suggest about the possible outcome of the Videohouse Three case? Thanks to the inscrutably terse order out of the Court (which, by the way, is par for the course in this kind of thing), we’re now off in the realm of Speculation and Surmise, where nothing is for sure. But it looks to us that the Latina decision could signal good things or bad things for the Videohouse Three.

A good thing: In order to determine that Latina was entitled to any stay at all (whether narrow or broad), the Court had to figure that the exclusion of Latina from the auction would result in “irreparable harm” to Latina. The FCC had consistently argued that exclusion from the auction would not be so dire. So the Latina decision indicates that the Court was at the very least more sympathetic to Latina’s claims on the irreparable harm front than to the FCC’s. That’s good news for the Videohouse Three because they, too, will have to convince the Court that they, too, will suffer irreparable harm if they don’t get into the auction. Since it’s notoriously hard to satisfy the irreparable harm standard, the Videohouse Three should probably be happy on this front.

Another good thing: another component of the stay analysis required Latina to demonstrate that there was some likelihood — not an odds-on mortal lock, but at least a credible possibility-verging-on-probability — that it would win on the merits. If Latina had come up short here, its stay request would presumably have been tossed tout de suite. It wasn’t, so we can guess that the Court saw some merit to Latina’s position.

But a bad thing: The Videohouse Three’s merits argument is similar, but not factually identical, to Latina’s. So even if the Court figured that Latina had demonstrated sufficient likelihood of success on the merits, that doesn’t necessarily mean the same will be true for the Videohouse Three.

And another bad thing: Because it took Latina’s narrow Plan A rather than the much broader Plan B, the Court also seemed to reveal some agreement with the FCC’s concern about the undesirable effects of an overall auction delay. Why, after all, would the Court go out of its way to express its “expect[ation]” that the limited Latina stay would not delay the auction? But if the Court shares the FCC’s concern on that front, and if the Videohouse Three gave the Court no alternative but to stay the whole auction, the Court may be reluctant give them what they asked for.

Ultimately, the decision will reduce to a balancing of the various pros and cons. Courts generally aren’t inclined to stay agency activities, but Courts often justify their denial of stay requests by concluding that nobody will be irreparably harmed in the absence of a stay. The Latina grant may make it harder for the Court to take the easy way out in the Videohouse Three case.

Check back here for updates.