FCC Assurances in Satellite Legal Fight Seemingly Mollify Judges
A federal appellate court panel on Friday seemed largely satisfied with FCC assertions that financier BIU will have an opportunity to bring its fraud-related claims before the agency if and when it gets a state court decision in its favor. A three-judge U.S. Court of Appeals for the D.C. Circuit panel heard oral argument Friday in BIU's challenge of the FCC allowing satellite operator Spectrum Five (S5) to withdraw a complaint against Inmarsat (see 2406100038) (docket 24-1189). BIU has a financial stake in S5.
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The FCC was reasonable in taking S5's withdrawal at face value, FCC Office of General Counsel lawyer Igor Helman argued. That withdrawal came before BIU raised allegations of fraud in the withdrawal, he said. Circuit Judge Sri Srinivisan responded that even though the FCC rejected with prejudice BIU's petition to reinstate the complaint, BIU, with its rights established by a state court, is free to come back before the FCC -- an assertion with which Helman agreed.
BIU wants to establish that S5 defaulted on its agreements, that it lacked authority to withdraw its petition, and that a state court is the right venue for such a declaration, Helman said. That kind of contractual interpretation "is a quintessential state court matter" and the FCC "was certainly not acting arbitrarily and capriciously" when it decided not to engage in those questions, he said.
Circuit Judge Harry Edwards asked if the agency would agree with a ruling in the agency's favor that also indicated the commission pledged that if BIU prevails in state court, it can reapproach the FCC; again, Helman agreed.
BIU lawyer Alan Greenberg of Greenberg Gross said that if BIU goes to state court, it will be under state law and would be there to enforce the loan documents, not necessarily to argue that there was fraud in the withdrawal of the FCC petition. Determining fraud in withdrawing an FCC petition would be up to the FCC, not a state court, he said. He said BIU envisions coming back to the agency with a judgment that says the loans were in default before the complaint was withdrawn and that BIU had enforceable power of attorney. BIU also anticipates it would return to the FCC with whatever evidence about the circumstances of the withdrawal came up through discovery, he said. "We wouldn't necessarily have a fraud judgment labeled as such, from the state court."
Srinivisan replied that while court discussions were throwing around the idea of a state court's fraud judgment, this was shorthand for the idea that BIU would get those contractual determinations from a state court, which would then "trigger all the rest of the things you're talking about."
If BIU goes to state court, its aim would be a ruling that lets it foreclose on its collateral -- in this case, the contractual right to the 95 degrees west geostationary orbit slot -- and then return to the FCC so that, if it ultimately prevails there, it can start to try to recoup money that S5 borrowed, Greenberg said.
Greenberg spent a lot of time discussing BIU's concern that the FCC dismissed with prejudice its petition seeking reinstatement of the S5 complaint. It's not clear why the FCC dismissed the petition with prejudice, given that it involved "highly suspicious circumstances" and S5's withdrawal request didn't ask for the dismissal to be with prejudice, he said.
If the FCC is saying that BIU can return to the agency armed with a state court judgment and seek to have the S5 complaint reinstated, then the prejudice/without prejudice issue doesn't seem to matter, Srinivisan said. Responded Greenberg, "It seems like awfully cold comfort" to BIU that it can supposedly reopen, when the FCC doesn't commit that it won't just deny BIU out of hand based on timeliness.
Nowhere in the full FCC's decision does it expressly say BIU can come back to the agency, said Judge Michelle Childs. Helman replied that nowhere does it say BIU cannot come back, either, and the absence of any such language means the agency didn't conclude BIU couldn't return.