ADVANCED COMMUNICATIONS LOSES BATTLE WITH MCI
Federal court in Ark. Thurs. rejected appeal by Advanced Communications in case in which defunct DBS startup attempted to sue MCI for “tortious interference” with FCC in 1995 decision that led to auction of spectrum it lost because of failure to meet milestones. MCI mailed letter to then FCC Chmn. Reed Hundt that urged Commission to auction Advanced orbital locations and channels and said it would be willing to pay $175 million. Hundt subsequently sent copies of letter to other commissioners while Advanced was appealing decision to deny extension of milestone requirements.
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Advanced lost appeal on 3-2 decision, with 8th U.S. Appeals Court, Little Rock, ruling company had failed to meet necessary due diligence standards. As result of failure, FCC cancelled permit and reclaimed orbital locations and channels. MCI’s letter was mentioned in footnote to section of decision that rejected current method of channel assignment urged by other DBS permittees and said Commission planned to promulgate new method of assignment -- namely, auction, court documents said. Commission eventually received $735 million at auction for locations and channels it reclaimed from Advanced, with MCI one of successful bidders.
U.S. Appeals Court, D.C., had affirmed decision in unpublished memorandum opinion. Advanced argued that MCI’s letter improperly influenced Commission by pointing out substantial revenue that could be gained by auction, but court concluded Advanced had presented nothing that was sufficient to cause it to “search beyond the text” of FCC order to find some illicit motivation. In 1998, Advanced sued MCI in Ark. state court alleging tortious interference with contract. It argued MCI’s letter to Hundt improperly influenced Commission to rule against Advanced, thereby causing it to breach its contract with satellite provider. Case was moved to federal court.
On appeal, Advanced argued that because it had not had opportunity to fully and fairly litigate its allegation that MCI improperly influenced Hundt, it shouldn’t be prohibited from raising issue: “Just because the D.C. Circuit Court said that the FCC’s explanations were reasonable explanations, does that make the explanations true?” MCI said Advanced complaints constituted impermissible collateral attack on Commission decision and said it should be precluded from re-litigating revenue issue that it raised to D.C. Circuit and that, in any event, MCI’s letter constituted permissible lobbying.
In ruling, court said: “Issue preclusion, or collateral estoppel, provides that once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude re- litigation of the issue in a suit on a different cause of action involving a party to the first case.” Court said Advanced didn’t dispute that in D.C. Circuit it had raised argument that Commission reached decision on improper revenue concerns. Advanced “presented nothing that would warrant the court looking beyond” FCC order, it said.