A Federal Appeals Court Invalidates the Federal Communications Commission's Massive Fine for the "Nipplegate" Super Bowl Incident: The Decision and Its Implications
By JULIE HILDEN
|Monday, Aug. 04, 2008|
On July 21, a three-judge panel of the U.S. Court of Appeals for the Third Circuit issued its decision in a closely-watched case arising out of the infamous moment during the 2004 Super Bowl when Janet Jackson’s breast was bared for a fraction of a second. The Federal Communications Commission (FCC) imposed a $550,000 fine on CBS, the broadcaster, based on Jackson’s nudity. CBS then challenged the fine in court.
The panel ruled in CBS’s favor. Unfortunately, however, its ruling is largely limited to the particular context of FCC policy as it stood at the time of the Super Bowl. If the same kind of incident were to happen this year, the fine might be upheld – especially if the performer at issue were an employee of the broadcaster, rather than an independent contractor like Janet Jackson.
The Ruling: Based on Administrative Law, and the FCC Rulings of Which CBS Had Notice at the Time of the Super Bowl
The crux of the panel’s ruling was simple: The Super Bowl occurred on February 1, 2004, and at that point, CBS was not on notice that the kind of “fleeting” nudity that occurred when Jackson’s breast was bared would be so harshly punished by the FCC – or, indeed, punished at all. Rather, CBS had every reason to think that such fleeting nudity would fall into a well-established exception to FCC policy covering fleeting indecency.
As the court’s opinion, written by Chief Judge Scirica, explained, it is a basic principle of administrative law that a federal agency “cannot change a well-established course of action without supplying notice of and a reasoned explanation for its policy departure.” And prior FCC decisions had “reiterated the agency’s policy that isolated or fleeting material would not be considered actionably indecent” – meaning that CBS was actually on clear notice of a policy opposite to the one that inspired the fine.
The agency did eventually give proper notice that it was changing its policy, the panel held, but not until shortly after the relevant Super Bowl, on March 3, 2004. That day, the FCC renounced its prior “fleeting expletives” policy. I discussed that policy in another column; a related decision by the U.S. Court of Appeals for the Second Circuit will be reviewed by the U.S. Supreme Court.
Because of this policy change, the Third Circuit’s decision will not assist today’s broadcasters – who are on notice of the change – in avoiding the imposition of fines like the one inflicted upon CBS.
Why Did the FCC Try to Enforce a Policy of Which CBS Was Not on Notice at the Time of the Super Bowl?
Given that it had only changed its policy after the Super Bowl, how did the FCC have the nerve to impose this whopping penalty on CBS?
The simple answer probably lies in the combination of political necessity and arrogance. After all, there was virtually no chance that the FCC would face any financial penalty if it lost the case, and even if it did lose, the loss could easily be spun as the decision of a liberal court. In contrast, if the FCC had not tried to fine CBS, there would have been a public outcry, and angry editorials.
Still, the FCC had to come up with some other answer than sheer politics for the purposes of this litigation. Thus, the FCC tried to claim there had been no policy change. However, the Third Circuit panel made short work of that contention in light of the FCC’s post-Super Bowl statement, noted above, expressly changing the policy.
In addition, the FCC tried to claim that its policy on fleeting expletives was different from its policy on fleeting nudity (and other kinds of visual “indecency”). But the Third Circuit panel made short work of that claim too – showing that these two categories of indecency had been treated identically in the past. The panel concluded that “the FCC consistently applied identical standards and engaged in identical analyses when reviewing complaints of potential indecency whether the complaints were based on words or images.”
Ironically, the FCC would probably have had good reason to eschew this robotic application of the same standard in different contexts, had it chosen to do so. After all, the reasons parents don’t want their children to hear expletives, and the reasons they don’t want them to see nudity – that is, the core reasons for which the FCC is purportedly regulating each type of “indecency” in the first place – are quite different.
Yet because – unlike the networks it regulates -- the FCC knew it would suffer no financial penalty if it took its eye off the ball, it missed the chance to make the kind of reasoned distinction that might actually have changed the court’s mind. As a result, it was unable failure to draw upon its own precedent to defend the word/image distinction in court.
The lesson here, then, is that FCC’s laziness can actually have a cost – albeit not a financial one, as is the case for the broadcasters it regulates, but a real cost nonetheless. If an agency is clear and candid about what it is doing – including when its policies change or differ in different scenarios -- then it is very hard to invoke administrative law to invalidate its actions. Ultimately, administrative law is procedural (although it can have important substantive consequences) and if procedures are followed, an agency can be virtually untouchable.
An Additional Issue: Was CBS Vicariously Responsible for Timberlake and Jackson’s Actions?
Interestingly, at least two judges on the Third Circuit panel went beyond the Administrative Procedure Act claim on which CBS won, to discuss another ground on which CBS also might have won. (It is somewhat unclear, at least to this reader, whether the third judge on the panel, Judge Rendell, who dissented in part and concurred in part, joined this section of the opinion.)
Judge Scirica’s opinion for the Court noted that this additional issue “was extensively briefed by the parties and amici.” Moreover, from a First Amendment perspective, it is nice for broadcasters to gain at least some clarity regarding when massive penalties like the one with which CBS was threatened can legitimately be imposed. But overall, I think it would have been wiser for the two judges in the panel majority to have left this discussion for another case, and another day.
The alternative argument went as follows: Janet Jackson (and Justin Timberlake, who caused the nudity, knowingly or unknowingly, by removing part of Jackson’s costume) were independent contractors, not employees of CBS. Thus, their actions cannot be imputed to CBS based on the theory of respondeat superior – the theory that establishes an employer’s vicarious responsibility for its employee’s actions.
After applying the multi-factor test for determining whether a person is an employee or an independent contractor, the panel majority held that, indeed, Timberlake and Jackson were independent contractors. They had been hired for brief, one-time performances; they chose their own choreographers, backup dancers and other assistants; and they were paid in a lump sum, rather than being salaried. Thus, any respondeat superior theory, premised on the FCC’s claim that they were employees, would necessarily fail.
The Implications of the Third Circuit Decision
What should broadcasters take from this decision, going forward? I think there are two pragmatic lessons to be learned.
First – and very unfortunately, from a First Amendment perspective – broadcasters seeking to avoid fines must be ultra-cautious about any bit of indecency getting on the air, however quick and inadvertent. (Remember, Jackson’s flash of breast occupied less than a second, and the FCC’s subsequent crackdown on fleeting expletives targeted words it takes about a second to say.)
This caution might take the form of more carefully vetting live performers’ scripts beforehand (though there is no evidence that this would have worked in the case of Jackson and Timberlake, as the Third Circuit panel’s decision reflects).
A much more effective solution, however, is video delay -- which offers strong protection from the kind of fines CBS faced. CBS used a brief audio delay, but no video delay, for the 2004 Super Bowl. With a seeming FCC crackdown on visual indecency, broadcasters may be well-advised to use both types of delay at live events if they want to avoid FCC fines in the future – at least, when their own employees are on the air.
Second, broadcasters truly interested in freedom of speech may want to make greater use of independent contractors and/or unpaid guests. (As I discussed in my last column, using independent contractors has an advantage for purposes of defamation law as well.) Not only did the independent contractor argument give CBS another point to make, but I think it also made the facts of the case more sympathetic. When an independent contractor, hired for a single performance, runs amok and goes off script, what chance (absent video delay) does the broadcaster really have to head off the problem?
In the Super Bowl case, for instance, Timberlake had performed the same song on television previously without incident; the nudity was unexpected, in this context, from Jackson, too. It seems CBS was genuinely blindsided. That would have been harder to say had Timberlake and Jackson been longtime employees, well known to others at CBS.
Broadcasters are still burdened by the Supreme Court’s decision to cling to the antiquated notion that their licenses impose upon them a sacred duty to the public – a notion that developed when licenses were prized and scarce, and cable, let alone the Internet, was not an option. But individuals, fortunately, have no such duty – and still have the full complement of First Amendment rights that broadcasters are wrongly thought to have sacrificed. For this reason, using independent contractors may be a savvy way to maximize First Amendment rights, in this context and others.