Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-21-2008

CBS Corporation v. FCC
Precedential or Non-Precedential: Precedential

Docket No. 06-3575




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                                  PRECEDENTIAL

  UNITED STATES COURT OF APPEALS
       FOR THE THIRD CIRCUIT



                No. 06-3575



          CBS CORPORATION;
       CBS BROADCASTING INC.;
    CBS TELEVISION STATIONS, INC.;
  CBS STATIONS GROUP OF TEXAS L.P.;
       and KUTV HOLDINGS, INC.,
                           Petitioners

                     v.

FEDERAL COMMUNICATION COMMISSION;
     UNITED STATES OF AMERICA,
                         Respondents



   On Petition for Review of Orders of the
   Federal Communications Commission
        FCC Nos. 06-19 and 06-68



        Argued September 11, 2007
           Before: SCIRICA, Chief Judge,
        RENDELL and FUENTES, Circuit Judges.

                  (Filed July 21, 2008)

ROBERT CORN-REVERE, ESQUIRE (ARGUED)
Davis Wright Tremaine LLP
1919 Pennsylvania, N.W., Suite 200
Washington, D.C. 20005

JEROME J. SHESTACK, ESQUIRE
Wolf Block Schorr and Solis-Cohen LLP
1650 Arch Street, 22nd Floor
Philadelphia, Pennsylvania 19103
      Attorneys for Petitioners

ERIC D. MILLER, ESQUIRE (ARGUED)
United States Department of Justice
Civil Division
950 Pennsylvania Avenue, N.W., Room 5634
Washington, D.C. 20530

JOSEPH R. PALMORE, ESQUIRE
Federal Communications Commission
Office of General Counsel
445 12th Street, S.W.
Washington, D.C. 20554



                           2
THOMAS M. BONDY, ESQUIRE
United States Department of Justice
Appellate Section
950 Pennsylvania Avenue, N.W., Room 7535
Washington, D.C. 20530
      Attorneys for Respondents

JOHN B. MORRIS, JR., ESQUIRE
Center for Democracy & Technology
1634 I Street, N.W., Suite 1100
Washington, D.C. 20006
       Attorney for Amici Curiae-Petitioners,
       Center for Democracy & Technology and
       Adam Thierer, Senior Fellow,
       The Progress & Freedom Foundation

NANCY WINKELMAN, ESQUIRE
Schnader Harrison Segal & Lewis
1600 Market Street, Suite 3600
Philadelphia, Pennsylvania 19103
      Attorney for Amici Curiae-Petitioners,
      Former FCC Officials Henry Geller
      and Glen O. Robinson

ANDREW J. SCHWARTZMAN, ESQUIRE
Media Access Project
1625 K Street, N.W., Suite 1118
Washington, D.C. 20006

                             3
      Attorney for Amicus Curiae-Petitioner,
      Center for Creative Voices in Media, Inc.

CARTER G. PHILLIPS, ESQUIRE
Sidley Austin LLP
1501 K Street, N.W.
Washington, D.C. 20005
       Attorney for Amicus Curiae-Petitioner,
       Fox Television Stations, Inc.

CHRISTOPHER T. CRAIG, ESQUIRE
Sparks & Craig LLP
6862 Elm Street, Suite 360
McLean, Virginia 22101
      Attorney for Amicus Curiae-Respondent,
      Parents Television Council, Inc.

THOMAS B. NORTH
    Pro Se Amicus Curiae-Respondent

DAVID P. AFFINITO, ESQUIRE
Dell'Italia Affinito & Santola
18 Tony Galento Plaza
Orange, New Jersey 07050
        Attorney for Amicus Curiae-Respondent,
        Morality In Media, Inc.




                             4
                 OPINION OF THE COURT



SCIRICA, Chief Judge.

       In this petition for review, CBS appeals orders of the
Federal Communications Commission imposing a monetary
forfeiture under 47 U.S.C. § 503(b) for the broadcast of
“indecent” material in violation of 18 U.S.C. § 1464 and 47
C.F.R. § 73.3999. The sanctions stem from CBS’s live
broadcast of the Super Bowl XXXVIII Halftime Show, in which
two performers deviated from the show’s script resulting in the
exposure of a bare female breast on camera, a deceitful and
manipulative act that lasted nine-sixteenths of one second. CBS
transmitted the image over public airwaves, resulting in punitive
action by the FCC.

        CBS challenges the Commission’s orders on
constitutional, statutory, and public policy grounds. Two of the
challenges are paramount: (1) whether the Commission acted
arbitrarily and capriciously under the Administrative Procedure
Act, 5 U.S.C. § 706, in determining that CBS’s broadcast of a
fleeting image of nudity was actionably indecent; and (2)
whether the Commission, in applying three theories of liability
– traditional respondeat superior doctrine, an alternative theory
of vicarious liability based on CBS’s duties as a broadcast
licensee, and the “willfulness” standard of the forfeiture statute


                                5
– properly found CBS violated the indecency provisions of 18
U.S.C. § 1464 and 47 C.F.R. § 73.3999. We will vacate the
FCC’s orders and remand for further proceedings consistent
with this opinion.

                              I.

       On February 1, 2004, CBS presented a live broadcast of
the National Football League’s Super Bowl XXXVIII, which
included a halftime show produced by MTV Networks.1 Nearly
90 million viewers watched the Halftime Show, which began at
8:30 p.m. Eastern Standard Time and lasted about fifteen
minutes. The Halftime Show featured a variety of musical
performances by contemporary recording artists, with Janet
Jackson as the announced headlining act and Justin Timberlake
as a “surprise guest” for the final minutes of the show.

        Timberlake was unveiled on stage near the conclusion of
the Halftime Show. He and Jackson performed his popular song
“Rock Your Body” as the show’s finale. Their performance,
which the FCC contends involved sexually suggestive
choreography, portrayed Timberlake seeking to dance with
Jackson, and Jackson alternating between accepting and
rejecting his advances. The performance ended with Timberlake
singing, “gonna have you naked by the end of this song,” and
simultaneously tearing away part of Jackson’s bustier. CBS had


   1
    At that time, both CBS and MTV Networks were divisions
of Viacom, Inc.

                              6
implemented a five-second audio delay to guard against the
possibility of indecent language being transmitted on air, but it
did not employ similar precautionary technology for video
images. As a result, Jackson’s bare right breast was exposed on
camera for nine-sixteenths of one second.

        Jackson’s exposed breast caused a sensation and resulted
in a large number of viewer complaints to the Federal
Communications Commission.2 In response, the Commission’s
Enforcement Bureau issued a letter of inquiry asking CBS to
provide more information about the broadcast along with a
video copy of the entire Super Bowl program. CBS supplied the
requested materials, including a script of the Halftime Show,
and issued a public statement of apology for the incident. CBS
stated Jackson and Timberlake’s wardrobe stunt was unscripted


   2
    The record is unclear on the actual number of complaints
received from unorganized, individual viewers. In its brief, the
FCC asserts it received “‘an unprecedented number’ of
complaints about the nudity broadcast during the halftime
show.” FCC Br. at 12 (citation omitted). CBS disputes the
calculation and significance of the viewer complaints. See CBS
Reply Br. at 15 n.6 (“Of the ‘over 542,000 complaints
concerning the broadcast’ the FCC claims to have received, over
85 percent are form complaints generated by single-interest
groups. Approximately twenty percent of the complaints are
duplicates, with some individual complaints appearing in the
record up to 37 times.” (citations omitted)).

                               7
and unauthorized, claiming it had no advance notice of any plan
by the performers to deviate from the script.

       On September 22, 2004, the Commission issued a Notice
of Apparent Liability finding CBS had apparently violated
federal law and FCC rules restricting the broadcast of indecent
material. After its review, the Commission determined CBS
was apparently liable for a forfeiture penalty of $550,000.3 CBS
submitted its Opposition to the Notice of Apparent Liability on
November 5, 2004.

        The Commission issued a forfeiture order over CBS’s
opposition on March 15, 2006, imposing a forfeiture penalty of
$550,000. In re Complaints Against Various Television
Licensees Concerning Their February 1, 2004 Broadcast of the
Super Bowl XXXVIII Halftime Show, 21 F.C.C.R. 2760 (2006)
(“Forfeiture Order”). Affirming its preliminary findings, the
Commission concluded the Halftime Show broadcast was
indecent because it depicted a sexual organ and violated
“contemporary community standards for the broadcast medium.”

10. In making this determination, the FCC relied on a
contextual analysis to find the broadcast of Jackson’s exposed

  3
    This figure represented the aggregate of proposed penalties
against individual CBS stations. At the time the Commission
issued its Notice of Apparent Liability, forfeiture penalties for
indecency violations were statutorily capped at $27,500. The
Commission proposed the maximum penalty for each CBS
station.

                               8
breast was: (1) graphic and explicit, (2) shocking and pandering,
and (3) fleeting. 

14. It further concluded that the brevity
of the image was outweighed by the other two factors. 

applied by the Commission is derived from its 2001
policy statement setting forth a two-part test for indecency: (1)
“the material must describe or depict sexual or excretory organs
or activities,” and (2) it must be “patently offensive as measured
by contemporary community standards for the broadcast
medium.” In re Industry Guidance on the Commission’s Case
Law Interpreting 18 U.S.C. § 1464 and Enforcement Policies
Regarding Broadcast Indecency, 16 F.C.C.R. 7999, 8002 ¶¶ 7-8
(2001) (emphasis in original). The Commission had informed
broadcasters in its 2001 policy statement that in performing the
second step of the test – measuring the offensiveness of any
particular broadcast – it would look to three factors: “(1) the
explicitness or graphic nature of the description or depiction of
sexual or excretory organs or activities; (2) whether the material
dwells on or repeats at length descriptions of sexual or excretory
organs or activities; (3) whether the material appears to pander
or is used to titillate, or whether the material appears to have
been presented for its shock value.” 

10 (emphasis
omitted).

       Additionally, the FCC determined CBS’s actions in
broadcasting the indecent image were “willful” and therefore
sanctionable by a monetary forfeiture under 47 U.S.C. §
503(b)(1).   See 

15. Adopting the definition of
“willful” found in section 312(f)(1) of the Communications


                                 9
Act,4 the Commission offered three explanations for its
determination of willfulness. 

FCC found CBS
“acted willfully because it consciously and deliberately
broadcast the halftime show, whether or not it intended to
broadcast nudity . . . .” 

FCC found CBS acted
willfully because it “consciously and deliberately failed to take
reasonable precautions to ensure that no actionably indecent
material was broadcast.” 

FCC applied a
respondeat superior theory in finding CBS vicariously liable for
the willful actions of its agents, Jackson and Timberlake. 

14, 2006, CBS submitted a Petition for
Reconsideration under 47 C.F.R. § 1.106, raising several
arguments against the Commission’s findings and conclusions.
In its Order on Reconsideration, the FCC rejected CBS’s
statutory and constitutional challenges and reaffirmed its
imposition of a $550,000 forfeiture. In re Complaints Against
Various Television Licensees Concerning Their February 1,
2004 Broadcast of the Super Bowl XXXVIII Halftime Show, 21
F.C.C.R. 6653 (2006) (“Reconsideration Order”).          The


    4
     This section of the Communications Act provides: “The
term ‘willful’, when used with reference to the commission or
omission of any act, means the conscious and deliberate
commission or omission of such act, irrespective of any intent
to violate any provision of this Act or any rule or regulation of
the Commission authorized by this Act or by a treaty ratified by
the United States.” 47 U.S.C. § 312(f)(1).

                               10
Reconsideration Order revised the Commission’s approach for
determining CBS’s liability under the willfulness standard. The
Commission reiterated its application of vicarious liability in the
form of respondeat superior and its determination that CBS was
directly liable for failing to take adequate measures to prevent
the broadcast of indecent material. See 

16. But it
abandoned its position that CBS acted willfully under 47 U.S.C.
§ 503(b)(1) by intentionally broadcasting the Halftime Show
irrespective of its intent to broadcast the particular content
included in the show. Instead, it determined CBS could be
liable “given the nondelegable nature of broadcast licensees’
responsibility for their programming.” 

23. The
Commission has since elaborated on this aspect of the
Reconsideration Order, explaining it as a separate theory of
liability whereby CBS can be held vicariously liable even for the
acts of its independent contractors because it holds non-
delegable duties as a broadcast licensee to operate in the public
interest and to avoid broadcasting indecent material. See, e.g.,
FCC Br. at 44-45.

       CBS timely filed a petition for review of the
Reconsideration Order on July 28, 2006. It challenges the
FCC’s orders on several grounds, and both parties are supported
by briefing from several amici.

                                II.

       Our standard of review of agency decisions is governed
by the Administrative Procedure Act, 5 U.S.C. § 706. Under the


                                11
Administrative Procedure Act, we “hold unlawful and set aside
agency action, findings, and conclusions” that are found to be
“arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with the law.” 

see, e.g., Motor
Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 

, 41 (1983).

       The scope of review under the “arbitrary and capricious”
standard is “narrow, and a court is not to substitute its judgment
for that of the agency.” State 

.
Nevertheless, the agency must reach its decision by
“examin[ing] the relevant data,” and it must “articulate a
satisfactory explanation for its action including a ‘rational
connection between the facts found and the choice made.’” 

Truck Lines, Inc. v. United States, 

, 168 (1962)). We generally find agency action arbitrary and
capricious where:

       the agency has relied on factors which Congress
       has not intended it to consider, entirely failed to
       consider an important aspect of the problem,
       offered an explanation for its decision that runs
       counter to the evidence before the agency, or is so
       implausible that it could not be ascribed to a
       difference in view or the product of agency
       expertise. The reviewing court should not attempt
       itself to make up for such deficiencies; we may
       not supply a reasoned basis for the agency’s
       action that the agency itself has not given.

                                12


(citing SEC v. Chenery Corp., 

, 196
(1947)).

         Our review of the constitutional questions is more
searching. In cases raising First Amendment issues, we have
“an obligation ‘to make an independent examination of the
whole record’ in order to make sure that ‘the judgment does not
constitute a forbidden intrusion on the field of free expression.’”
United States v. Various Articles of Merch., Schedule No. 287,

, 652 (3d Cir. 2000) (quoting Bose Corp. v.
Consumers Union, 

, 499 (1984) (citations
omitted)).

                               III.

        The FCC possesses authority to regulate indecent
broadcast content, but it had long practiced restraint in
exercising this authority. During a span of nearly three decades,
the Commission frequently declined to find broadcast
programming indecent, its restraint punctuated only by a few
occasions where programming contained indecent material so
pervasive as to amount to “shock treatment” for the audience.
Throughout this period, the Commission consistently explained
that isolated or fleeting material did not fall within the scope of
actionable indecency.

       At the time the Halftime Show was broadcasted by CBS,
the FCC’s policy on fleeting material was still in effect. The
FCC contends its restrained policy applied only to fleeting
utterances – specifically, fleeting expletives – and did not extend

                                13
to fleeting images. But a review of the Commission’s
enforcement history reveals that its policy on fleeting material
was never so limited. The FCC’s present distinction between
words and images for purposes of determining indecency
represents a departure from its prior policy.

        Like any agency, the FCC may change its policies
without judicial second-guessing. But it cannot change a well-
established course of action without supplying notice of and a
reasoned explanation for its policy departure. Because the FCC
failed to satisfy this requirement, we find its new policy arbitrary
and capricious under the Administrative Procedure Act as
applied to CBS.

                                A.

       Section 326 of the Communications Act prohibits the
FCC from censoring its licensees’ broadcasts.5 Subject to this
constraint, the FCC retains authority to regulate obscene,
indecent, or profane broadcast content. See 18 U.S.C. § 1464
(“Whoever utters any obscene, indecent, or profane language by


     5
     See 47 U.S.C. § 326 (“Nothing in this chapter shall be
understood or construed to give the Commission the power of
censorship over the radio communications or signals transmitted
by any radio station, and no regulation or condition shall be
promulgated or fixed by the Commission which shall interfere
with the right of free speech by means of radio
communication.”).

                                14
means of radio communication shall be fined under this title or
imprisoned not more than two years, or both.”). Indecency and
obscenity are distinct categories of speech. See FCC v. Pacifica
Found., 

, 739-41 (1978) (plurality opinion)
(“Pacifica”). Indecency, unlike obscenity, is protected by the
First Amendment. Sable Commc’ns of Cal., Inc. v. FCC, 

, 126 (1989). The FCC’s authority to restrict indecent
broadcast content is nevertheless constitutionally permissible
because of the unique nature of the broadcast medium. 

; see also 

(Powell, J.,
concurring).

       Congress authorized the FCC to impose forfeiture
penalties for violations of 18 U.S.C. § 1464 in 1960.6 But the
FCC did not exercise its authority to find a broadcast statutorily
“indecent” until 1975, when it issued a forfeiture penalty against
Pacifica Foundation for broadcasting comedian George Carlin’s
“Filthy Words” monologue. See In re Citizen’s Complaint
Against Pacifica Found., Station WBAI(FM), N.Y., N.Y., 56
F.C.C.2d 94 (1975). Carlin’s monologue, which Pacifica aired
on the radio in an early-afternoon time slot, contained extensive
and repetitive use of several vulgar expletives over a period of
twelve minutes. See 

.


      6
       See 47 U.S.C. § 503(b)(1)(D) (“Any person who is
determined by the Commission . . . to have . . . violated any
provision of section . . . 1464 of title 18 . . . shall be liable to the
United States for a forfeiture penalty.”).

                                  15
        Pacifica appealed the FCC’s forfeiture order to the
United States Court of Appeals for the D.C. Circuit. The FCC
issued a clarification order while Pacifica’s appeal was pending,
expressly limiting its prior forfeiture order to the specific facts
of the Carlin monologue. In re ‘A Petition for Clarification or
Reconsideration’ of a Citizen’s Complaint Against Pacifica
Found., Station WBAI(FM), N.Y., N.Y., 59 F.C.C.2d 892 (1976)
(“Pacifica Clarification Order”). Expressly acknowledging the
forfeiture order’s potential negative impact on broadcast
coverage of live events where “there is no opportunity for
journalistic editing,” the FCC stated its intention to exclude such
circumstances from the scope of actionable indecency. 

4 n.1.

       Following the Pacifica Clarification Order, the D.C.
Circuit reversed the FCC’s forfeiture order against Pacifica as
vague and overbroad and found the agency’s indecency regime
constituted invalid censorship under 47 U.S.C. § 326. Pacifica
Found. v. FCC, 

, 14 (D.C. Cir. 1977). The FCC
appealed and the Supreme Court reversed in a narrow plurality
opinion. See 

. The Court rejected
Pacifica’s statutory argument that the term “indecent” in 18
U.S.C. § 1464 only covered obscene speech. 

. But the Court confirmed the general validity of the
FCC’s indecency regime, “emphasiz[ing] the narrowness of [its]
holding,” which it confined to the facts of the Carlin monologue.

Justices Powell and Blackmun concurred in the
judgment, writing separately in part to reiterate the narrowness


                                16
of the decision and to note the Court’s holding did not “speak to
cases involving the isolated use of a potentially offensive word
in the course of a radio broadcast, as distinguished from the
verbal shock treatment administered by respondent here.” 

(Powell, J., concurring).

       Shortly after the Court’s ruling in Pacifica, a
broadcaster’s license renewal was challenged on the basis that
the broadcaster had aired indecent programming. See In re
Application of WGBH Educ. Found., 69 F.C.C.2d 1250 (1978)
(“WGBH”). Viewer complaints alleged the broadcaster aired
several programs containing nudity and other allegedly
offensive material. 

2. Distinguishing the facts of
WGBH from the Court’s ruling in Pacifica, the FCC rejected the
challenge and denied that Pacifica afforded it any “general
prerogative to intervene in any case where words similar or
identical to those in Pacifica are broadcast over a licensed radio
or television station.” 

10. The FCC, noting it
“intend[ed] strictly to observe the narrowness of the Pacifica
holding” and emphasizing the language in Justice Powell’s
concurring opinion, 

10, concluded the single use of an
expletive in a program “should not call for us to act under the
holding of Pacifica.” 

10 n.6.

       The FCC’s restrained enforcement policy continued in
the years following Pacifica. Rejecting another challenge to a
broadcaster’s license renewal based on the airing of allegedly
indecent material, the FCC reaffirmed that isolated use of
expletives in broadcasts did not constitute actionable indecency

                               17
under 18 U.S.C. § 1464. See In re Application of Pacifica
Found., 95 F.C.C.2d 750 (1983). The complaint alleged the
broadcaster had on multiple occasions aired programming
containing language such as “motherfucker,” “fuck,” and “shit.”

16. The FCC held these facts did not constitute a prima
facie showing of actionable indecency under 18 U.S.C. § 1464,
because the complainant had failed to show the broadcasts
amounted to “verbal shock treatment” as opposed to “isolated
use.” 

18.

        In April 1987, the FCC issued three simultaneous
indecency decisions. See In re Pacifica Found., Inc., 2 F.C.C.R.
2698 (1987); In re Regents of the Univ. of Cal., 2 F.C.C.R. 2703
(1987); In re Infinity Broad. Corp., 2 F.C.C.R. 2705 (1987).
These decisions reaffirmed the Commission’s restrained
enforcement policy and reiterated the agency’s policy that
isolated or fleeting material would not be considered actionably
indecent. See, e.g., Regents of the Univ. of Cal. at ¶ 3 (“Speech
that is indecent must involve more than an isolated use of an
offensive word.”).

      Later in 1987, reconsidering these decisions, the
Commission abandoned the view that only the particular “dirty
words” used in the Carlin monologue could be indecent.7

   7
     See In re Infinity Broad. Corp., 3 F.C.C.R. 930, ¶ 5 (1987),
vacated in part on other grounds, Action for Children’s
Television v. FCC, 

, 1337 (D.C. Cir. 1988) (“ACT
I”), superseded by Action for Children’s Television v. FCC, 58

                               18
Instead, the FCC explained it would thereafter rely on the
broader terms of its generic indecency standard, which defined
indecent material as “language that describes, in terms patently
offensive as measured by contemporary community standards
for the broadcast medium, sexual or excretory activities or
organs, when there is a reasonable risk that children may be in
the audience.” 

¶ 2, 5.8 Even so, the FCC affirmed all
three decisions on reconsideration, never indicating
disagreement with those decisions’ express statements that
isolated or fleeting material could not be actionably indecent.

(D.C. Cir. 1995) (en banc) (“ACT II”).
   8
     As described in greater detail infra, subsequent litigation
determined what time of day broadcasters could reasonably air
indecent programming without expecting children to be in the
audience. The D.C. Circuit Court of Appeals rejected a total
ban on indecency, instructing the FCC to identify a precise time
period during which broadcasters could air indecent material.
See ACT 

. In response, the Commission adopted the
safe-harbor rule of 47 C.F.R. § 73.3999. After further
instruction from the D.C. Circuit in 1995, ACT I

, the
Rule was amended to its current form, which confines
enforcement of indecency restrictions to the hours “between
6:00 a.m. and 10:00 p.m.” See 47 C.F.R. § 73.3999; In re
Enforcement of Prohibitions Against Broadcast Indecency in 18
U.S.C. § 1464, 10 F.C.C.R. 10558 (1995).

                              19
         In 2001, the broadcast industry sought clarification of
the policies and rules of the FCC’s indecency enforcement
regime. Guidance for the industry came in the form of a policy
statement issued by the Commission. See Industry Guidance on
the Commission’s Case Law Interpreting 18 U.S.C. § 1464 and
Enforcement Policies Regarding Broadcast Indecency, 16
F.C.C.R. 7999, ¶ 19 (2001) (“Industry Guidance”). The policy
statement included multiple examples of FCC rulings as “case
comparisons” highlighting the factors that had proved
significant in prior indecency determinations. One of the factors
noted as leading to prior determinations that a program was not
actionably indecent was the “fleeting or isolated” nature of
potentially indecent material in the context of the overall
broadcast. See 

¶ 17-18.

       Soon after the Commission’s issuance of the Industry
Guidance policy statement, its restrained enforcement policy
changed. In an unscripted remark during a live NBC broadcast
of the Golden Globe Awards on January 19, 2003, musician
Bono said “this is really, really fucking brilliant” while
accepting an award. See In re Complaints Against Various
Broadcast Licensees Regarding Their Airing of the “Golden
Globe Awards” Program, 19 F.C.C.R. 4975, ¶ 3 n.4 (2004)
(“Golden Globes”). Viewers complained to the FCC about
Bono’s speech, but the Commission’s Enforcement Bureau
rejected the complaints in part because the utterance was
fleeting and isolated and therefore did “not fall within the scope
of the Commission’s indecency prohibition.” See In re


                               20
Complaints Against Various Broadcast Licensees Regarding
Their Airing of the “Golden Globe Awards” Program, 18
F.C.C.R. 19859, ¶ 6 (FCC Enforcement Bureau 2003). The
Enforcement Bureau specifically reaffirmed that “fleeting and
isolated remarks of this nature do not warrant Commission
action.” 

3, 2004, the full Commission reversed the
Enforcement Bureau’s decision. See generally Golden 

. Although the FCC acknowledged the existence of its
restrained enforcement policy for isolated or fleeting utterances,
it overruled all of its prior cases holding such instances not
actionable. 

12 (“While prior Commission and staff
action have indicated that isolated or fleeting broadcasts of the
‘F-Word’ such as that here are not indecent or would not be
acted upon, consistent with our decision today we conclude that
any such interpretation is no longer good law.”). But the
Commission made it clear that licensees could not be held liable
for broadcasting fleeting or isolated indecent material prior to its
Golden Globes decision. See 

15 & n.40 (declining to
impose a forfeiture penalty because “existing precedent would
have permitted [the Golden Globe Awards] broadcast” and
therefore it would be “inappropriate” to sanction licensees for
conduct prior to notice of policy change).9


    9
    The Commission also cited Trinity Broad. of Fla., Inc. v.
FCC, 

(D.C. Cir. 2000), explaining that the court
in Trinity “reversed [a] Commission decision that denied a

                                21
        The FCC’s new indecency policy created in Golden
Globes was soon challenged by the broadcast industry. On
February 21, 2006, the Commission issued an omnibus order
resolving multiple indecency complaints against television
broadcasters in an effort to “provide substantial guidance to
broadcasters and the public about the types of programming that
are impermissible under our indecency standard.” In re
Complaints Regarding Various Television Broadcats Between
February 2, 2002 and March 8, 2005, 21 F.C.C.R. 2664, ¶ 2
(2006) (“Omnibus Order”). The Omnibus Order found four
programs indecent and profane: (1) Fox’s broadcast of the 2002
Billboard Music Awards, in which performer Cher used an
unscripted expletive during her acceptance speech; (2) Fox’s
broadcast of the 2003 Billboard Music Awards, in which
presenter Nicole Richie used two unscripted expletives; (3)
ABC’s broadcast of various episodes of its NYPD Blue series,
in which assorted characters used scripted expletives; and (4) a
CBS broadcast of The Early Show, in which a guest used an
unscripted expletive during a live interview. 

¶ 101, 112
n.64, 125, 137. Applying its policy announced in Golden
Globes, the Commission found the broadcasts indecent despite
the fleeting and isolated nature of the offending expletives. 

¶ 104, 116, 129, 140.


renewal application for abuse of process in connection with the
Commission’s minority ownership rules because the court found
the Commission had not provided sufficiently clear notice of
what those rules required.” Golden Globes at ¶ 15 n.40.

                               22
        As in Golden Globes, the Commission recognized the
inequity in retroactively sanctioning the conduct of broadcast
licensees. Because the offending broadcasts occurred prior to
the issuance of its Golden Globes decision, the FCC concluded
that existing precedent would have permitted the broadcasts. 

FCC did not issue forfeiture orders against any
of the licensees. 

¶ 111, 124, 136, 145.

       The networks appealed the Omnibus Order, and the cases
were consolidated before the United States Court of Appeals for
the Second Circuit. Granting a request by the FCC, the court
remanded the matter to allow the Commission an opportunity to
address the petitioners’ arguments. After soliciting public
comment, the FCC issued a new order on November 6, 2006,
reaffirming its indecency findings against Fox for the 2002 and
2003 Billboard Music Awards but reversing its finding against
CBS for The Early Show broadcast and dismissing the
complaint against ABC on procedural grounds. See In re
Complaints Regarding Various Television Broadcasts Between
February 2, 2002 and March 8, 2005, 21 F.C.C.R. 13299 (2006)
(“Fox Remand Order”).

        The networks’ original appeal to the Second Circuit was
reinstated on November 8, 2006, and consolidated with a
petition for review of the Fox Remand Order. Fox Television
Stations, Inc. v. FCC, 

, 454 (2d Cir. 2007) (“Fox”),
cert. granted, 

(U.S. Mar. 17, 2008) (No. 07-
582). The court granted motions to intervene by other networks,
including CBS, and the networks collectively raised several

                              23
challenges to the validity of the Fox Remand Order essentially
mirroring those raised in this case. See 

.

        Undertaking a thorough review of the history of the
FCC’s indecency regime similar to that which we engage in
here, the Second Circuit found the FCC’s “consistent
enforcement policy” prior to the Golden Globes decision
excluded fleeting or isolated expletives from regulation. 

The court concluded “there is no question” that the FCC
changed its policy with respect to fleeting expletives, and that
the policy “changed with the issuance of Golden Globes.” 

Judge Leval, dissenting in Fox for other
reasons, agreed with the majority’s conclusion that the FCC
changed its position on fleeting utterances, although he
considered the change of standard “relatively modest.” See 

(Leval, J., dissenting); see also 

(Leval, J.,
dissenting) (stating that the FCC changed its position and
finding that the FCC clearly acknowledges that its Golden
Globes and Fox Remand Order rulings were not consistent with
its prior standard). We agree that the Golden Globes decision
represented a policy departure by the FCC. The extensive
history detailed above demonstrates a consistent and entrenched
policy of excluding fleeting broadcast material from the scope
of actionable indecency.

       In spite of this history, the FCC contends that by
February 1, 2004 (the date of the Halftime Show), a broadcaster
in CBS’s position should have known that even isolated or
fleeting indecent material in programming could be actionable.

                              24
Despite its announced reversal of prior policy in its Golden
Globes decision on March 3, 2004, the Commission points to
one sentence in its 2001 policy statement to support its position:
“[E]ven relatively fleeting references may be found indecent
where other factors contribute to a finding of patent
offensiveness.” Industry Guidance at ¶ 19.10 But when read in

  10
     In its 2001 policy statement, the Commission described the
“principal factors that have proved significant in [its] decisions
to date” as: “(1) the explicitness or graphic nature of the
description or depiction of sexual or excretory organs or
activities; (2) whether the material dwells on or repeats at length
descriptions of sexual or excretory organs or activities; (3)
whether the material appears to pander or is used to titillate, or
whether the material appears to have been presented for its
shock value.” Industry Guidance at ¶ 10 (emphasis in original).
It has since contended that its fleeting material policy was no
policy at all, asserting instead that the fleeting nature of material
was only a consideration under the second factor and could be
outweighed by the other two factors depending on the specific
facts of a case. But as we detail infra, this assertion contradicts
the history of the Commission’s indecency enforcement regime
and is foreclosed by the agency’s admissions in Golden Globes
and Fox, which are controlling here, that its prior policy was to
exclude fleeting material from the scope of actionable
indecency. Although the FCC disputes the breadth of its policy,
now contending the policy was limited only to fleeting
expletives or alternatively to fleeting utterances, the fleeting

                                 25
its original context rather than as an isolated statement, this
sentence does not support the Commission’s assertion here. The
“relatively fleeting references” identified by that sentence are
distinguishable from the truly “fleeting” broadcast material the
FCC had included in its fleeting material policy. The paragraph
cites, for instance, a notice of apparent liability against WEZB-
FM, New Orleans, to exemplify the kind of “relatively fleeting
references” the FCC considered actionably indecent. See 

New Orleans, Inc. (WEZB(FM)), 12 F.C.C.R. 4147
(MMB 1997) (“WEZB-FM NAL”)). The citation to WEZB-FM
NAL specifically describes as indecent an “announcer joke”
involving incest, forceful sexual contact with children, and a
reference to cleaning “blood off [a] diaper.” 

joke” is distinguishable on its face from “fleeting”
material such as a brief glimpse of nudity or isolated use of an
expletive. Moreover, the “announcer joke” was merely one
incident among dozens included in a transcript supporting the
forfeiture liability determination in the WEZB-FM NAL.11


nature of broadcast material was unquestionably treated by the
FCC as more than one of several contextual factors subject to
balancing.
  11
     The WEZB-FM NAL found a broadcast licensee apparently
liable for a forfeiture penalty of $12,000 for its broadcast of
indecent material during six radio broadcasts spanning fourteen
hours of airtime over nearly a one year period. The WEZB-FM
NAL provides transcript excerpts from these broadcasts, which

                               26
         Nevertheless, as it clarified at oral argument, the FCC
relies on its 2001 Industry Guidance to contend its policy on
fleeting or isolated material “was a policy with respect to cases
relying solely on the use of expletives.” As the Commission
explained at oral argument, “[t]here was not a policy that all
short utterances were exempt.”            This reading of the
Commission’s policy on fleeting material is untenable. Even the
FCC’s Industry Guidance fails to support such a narrow
characterization. See, e.g., Industry Guidance at ¶ 18 (quoting
L.M. Commc’ns of S. C., Inc. (WYBB(FM)), 7 F.C.C.R. 1595
(MMB 1992), for the proposition that “‘a fleeting or isolated
utterance . . . , within the context of live and spontaneous
programming, does not warrant a Commission sanction.’”).

       Accordingly, we find the Commission’s unsubstantiated
contentions in this regard contradict the lengthy history of the
Commission’s restrained enforcement policy. While “an
agency’s interpretation of its own precedent is entitled to
deference,” Cassel v. FCC, 

, 483 (D.C. Cir. 1998),
deference is inappropriate where the agency’s proffered
interpretation is capricious. Until its Golden Globes decision in
March of 2004, the FCC’s policy was to exempt fleeting or



involved very graphic segments discussing a variety of sexual
topics in extended detail. The “announcer joke” included in the
FCC’s Industry Guidance was merely one of these factual
predicates for the broadcast licensee’s forfeiture liability for
indecency.

                               27
isolated material from the scope of actionable indecency.
Because CBS broadcasted the Halftime Show prior to Golden
Globes, this was the policy in effect when the incident with
Jackson and Timberlake occurred.

                               B.

        If the FCC’s restrained enforcement policy for fleeting
broadcast material was intact until the Golden Globes decision
in March of 2004, our inquiry would end with a simple
examination of the chronology of the FCC’s actions. CBS
broadcasted the Halftime Show more than a month prior to
Golden Globes. The Commission’s orders here would amount
to a retroactive application of the new policy it announced in
Golden Globes, which would raise due process concerns. The
Commission has recognized the inequity in such an outcome.
See Omnibus 

, at ¶¶ 111, 124, 136, 145 (declining
to issue forfeiture orders because the offending broadcasts
occurred prior to the issuance of its Golden Globes decision, and
therefore “existing precedent would have permitted [the]
broadcasts”); see also Trinity Broad. of Fla., 

(“Because ‘[d]ue process requires that parties receive fair
notice before being deprived of property,’ we have repeatedly
held that ‘[i]n the absence of notice–for example, where the
regulation is not sufficiently clear to warn a party about what is
expected of it–an agency may not deprive a party of property by
imposing civil or criminal liability.’” (citation omitted)).




                               28
        But the FCC urges another reading of Golden Globes,
perhaps less obvious yet still plausible, which interprets Golden
Globes as addressing only the broadcast of fleeting expletives,
not other fleeting material such as brief images of nudity.
Further, the Commission contends its fleeting material policy,
as initially adopted, was limited to fleeting words and did not
extend to fleeting images. Under this view, Golden Globes
would be inapposite here – the Commission’s sanction against
CBS would be in line with its treatment of images as part of its
historical indecency enforcement regime. If, as the FCC
contends, Golden Globes was limited to fleeting expletives, then
its orders issuing forfeiture penalties in this case did not
constitute a retroactive application of the policy change in
Golden Globes.

        But even if we accept the FCC’s interpretation of Golden
Globes and read it as only addressing fleeting expletives, the
Commission’s view of the scope of its fleeting materials policy
prior to Golden Globes is unsustainable. As we will explain, the
Commission – before Golden Globes – had not distinguished
between categories of broadcast material such as images and
words. Accordingly, even if, as the FCC contends, Golden
Globes only addressed expletives, it nevertheless represented the
first time the Commission distinguished between formats of
broadcast material or singled out any one category of material
for special treatment under its fleeting material policy. That is,
it altered the scope of the FCC’s fleeting material policy by
excising only one category of fleeting material – fleeting


                               29
expletives – from the policy. And it therefore did not constitute
an abdication of its fleeting material policy. Rather, a residual
policy on other categories of fleeting material – including all
broadcast content other than expletives – remained in effect.

       Accordingly, subsequent agency action was required to
change the fleeting material policy as it applied to broadcast
content other than expletives. By targeting another category of
fleeting material – fleeting images – in its orders against CBS in
this case, the FCC apparently sought to further narrow or
eliminate the fleeting material policy as it existed following
Golden Globes. The Commission’s determination that CBS’s
broadcast of a nine-sixteenths of one second glimpse of a bare
female breast was actionably indecent evidenced the agency’s
departure from its prior policy. Its orders constituted the
announcement of a policy change – that fleeting images would
no longer be excluded from the scope of actionable indecency.

       The question is whether the FCC’s departure from its
prior policy is valid and enforceable as applied to CBS. As
noted, agencies are free to change their rules and policies
without judicial second-guessing. See, e.g., Chevron, U.S.A.,
Inc. v. Natural Res. Def. Council, Inc., 

, 863
(1984). But an agency cannot ignore a substantial diversion
from its prior policies. See Ramaprakash v. FAA, 

, 1124 (D.C. Cir. 2003) (agency must “provide a reasoned
analysis indicating that prior policies and standards are being
deliberately changed, not casually ignored”). As the Supreme
Court explained in State Farm, an agency must be afforded great

                               30
latitude to change its policies, but it must justify its actions by
articulating a reasoned analysis behind the change:

       Petitioner . . . contend[s] that the rescission of an
       agency rule should be judged by the same
       standard a court would use to judge an agency’s
       refusal to promulgate a rule in the first place–a
       standard Petitioner believes considerably
       narrower than the traditional arbitrary and
       capricious test and “close to the borderline of
       nonreviewability.” We reject this view. . . .
       Petitioner’s view would render meaningless
       Congress’ authorization for judicial review of
       orders revoking . . . rules. Moreover, the
       revocation of an extant regulation is substantially
       different than a failure to act. Revocation
       constitutes a reversal of the agency’s former
       views as to the proper course. A “settled course
       of behavior embodies the agency’s informed
       judgment that, by pursuing that course, it will
       carry out the policies committed to it by Congress.
       There is, then, at least a presumption that those
       policies will be carried out best if the settled rule
       is adhered to.” Accordingly, “an agency changing
       its course by rescinding a rule is obligated to
       supply a reasoned analysis for the change beyond
       that which may be required when an agency does
       not act in the first instance.”


                                

(citations omitted).

       The agency’s obligation to supply a reasoned analysis for
a policy departure requires an affirmative showing on record.
It “must examine the relevant data and articulate a satisfactory
explanation for its action including a ‘rational connection
between the facts found and the choice made.’” 

(quoting Burlington Truck Lines v. United States, 

,
168 (1962)). A reviewing court “must ‘consider whether the
decision was based on a consideration of the relevant factors and
whether there has been a clear error of judgment.’” 

The agency’s actions will then be set aside as
“arbitrary and capricious” if the agency failed to provide a
“reasoned explanation” for its decision to change course.
Massachusetts v. EPA, — U.S. —, 

, 1463 (2007);
see State 

; Nat’l Cable & Telecomms.
Ass’n v. Brand X Internet Servs., 

, 981 (2005)
(“unexplained inconsistency” in agency practice is a reason for
holding a policy reversal “arbitrary and capricious” under the
APA, unless “the agency adequately explains the reasons for a
reversal of policy”).

       In Fox, the Second Circuit analyzed the FCC’s changed
policy on fleeting expletives under State Farm,12 but the panel

     12
       It was undisputed that the FCC changed its policy on
fleeting expletives in Golden Globes, which was decided prior
to Fox. But as the Fox court explained, the actual moment the
agency changed its course was not pertinent in determining

                               32
split on the outcome of its analysis. Judge Pooler, writing for
the majority, found the policy change arbitrary and capricious
because the FCC failed to provide a reasoned explanation for the
change. 

(“The Networks contend that the
Remand Order is arbitrary and capricious because the FCC has
made a 180-degree turn regarding its treatment of ‘fleeting
expletives’ without providing a reasoned explanation justifying
the about-face. We agree.”). Scrutinizing the sufficiency of the
Commission’s explanation for its policy change, the court


whether the change was valid under State Farm:
        [W]e . . . reject the FCC’s contention that our
        review here is narrowly confined to the specific
        question of whether the two Fox broadcasts . . .
        were indecent. The [Fox Remand Order] applies
        the policy announced in Golden Globes. If that
        policy is invalid, then we cannot sustain the
        indecency findings against Fox. Thus, as the
        Commission conceded during oral argument, the
        validity of the new “fleeting expletive” policy
        announced in Golden Globes and applied in the
        [Fox Remand Order] is a question properly before
        us on this petition for review.

. To hold otherwise would create a
situation ripe for manipulation by an agency. Cf. ACT 

,
852 F.2d at 1337 (“[A]n agency may not resort to [ad hoc]
adjudication as a means of insulating a generic standard from
judicial review.”).

                              33
rejected the agency’s proffered rationale as “disconnected from
the actual policy implemented by the Commission.” 

n.8 (citation omitted).

       Judge Leval, writing in dissent, also applied State Farm,
but he disagreed with the amount of deference the majority
afforded the FCC’s policy decision. Although he agreed that the
FCC was obligated to provide a reasoned explanation for its
policy shift, he found the agency’s explanation sufficient. As
Judge Leval explained:

       In my view, in changing its position on the
       repetition of an expletive, the Commission
       complied with these requirements. It made clear
       acknowledgment that its Golden Globes and
       Remand Order rulings were not consistent with its
       prior standard regarding lack of repetition. It
       announced the adoption of a new standard. And
       it furnished a reasoned explanation for the
       change. Although one can reasonably disagree
       with the Commission’s new position, its
       explanation . . . is not irrational, arbitrary, or
       capricious. The Commission thus satisfied the
       standards of the Administrative Procedure[] Act.

(Leval, J., dissenting).

       In this case, State Farm also provides the correct standard
of review, but we need not engage in the substantive inquiry that
divided the Second Circuit panel in Fox. There, as Judge Leval

                                34
noted in dissent, the FCC provided an explanation for changing
its policy on fleeting expletives. The critical question splitting
the court was whether that explanation was adequate under State
Farm. Here, unlike in Fox, the FCC has not offered any
explanation – reasoned or otherwise – for changing its policy on
fleeting images. Rather, the FCC asserts it never had a policy of
excluding fleeting images from the scope of actionable
indecency, and therefore no policy change occurred when it
determined that the Halftime Show’s fleeting image of Janet
Jackson’s breast was actionably indecent. Accordingly, we must
determine whether the FCC’s characterization of its policy
history is accurate. If it is not, then the FCC’s policy change
must be set aside as arbitrary and capricious, because it has
failed to even acknowledge its departure from its former policy
let alone supply a “reasoned explanation” for the change as
required by State Farm.

        CBS contends the FCC’s indecency regime treated words
and images alike, so the exception for fleeting material applied
with equal force to words and images. The Commission rejects
this assertion, contending its prior policy on fleeting material
was limited to words alone. Although the FCC acknowledges
it had never explicitly distinguished between images and words
for the purpose of defining the scope of actionable indecency, it




                               35
contends the existence of such a distinction was obvious, even
if unstated.13

        The Commission’s conclusion on the nature and scope of
its indecency regime – including its fleeting material policy – is
at odds with the history of its actions in regulating indecent
broadcasts. In the nearly three decades between the Supreme
Court’s ruling in Pacifica and CBS’s broadcast of the Halftime


  13
     The FCC’s position is difficult to reconcile with the source
of its authority to regulate broadcast content. The text of 18
U.S.C. § 1464 provides: “Whoever utters any obscene, indecent,
or profane language by means of radio communication shall be
fined under this title or imprisoned not more than two years, or
both.” 

Although the text on its face only
reaches spoken words, it is applied broadly, as here, to reach all
varieties of indecent content. But this broad interpretation of the
text requires that the FCC treat words and images
interchangeably in order to fit its regulation of indecent images
within the boundaries of its statutory authority. Where the
FCC’s entire enforcement regime is built on the agency’s
treatment of words and images as functionally identical, it is
unclear how the difference between words and images is
“obvious.” At minimum, the FCC cannot reasonably expect the
difference between words and images to be so self-evident that
broadcast licensees seeking to comply with indecency standards
would interpret FCC enforcement orders narrowly based on
whether the reviewed content consisted of words or images.

                                36
Show, the FCC had never varied its approach to indecency
regulation based on the format of broadcasted content. Instead,
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.

       In 2000, for example, the FCC rejected a complaint of
indecency based on scenes of nudity in a television broadcast of
the film “Schindler’s List.” In re WPBN/WTOM License
Subsidiary, Inc., 15 F.C.C.R. 1838 (2000). Finding the
broadcasted images not actionably indecent, the FCC noted
“nudity itself is not per se indecent” and applied the identical
indecency test the agency used to review potentially indecent
language. 

11. The Commission did not treat the nudity
complaint differently – factually or legally – from a complaint
for indecency based on a spoken utterance. See 

10 n.5
(“The Supreme Court has observed that contextual assessments
may involve (and are not limited to) an examination of whether
the actual words or depictions in context are, for example,
vulgar or shocking, a review of the manner in which the words
or depictions are portrayed, and an analysis of whether the
allegedly indecent material is isolated or fleeting.” (emphasis
added)). The Commission even referred in a footnote to its
policy towards fleeting material, never suggesting the policy
would be inapplicable because the offending broadcast content
was an image rather than a word. See 

5 n.10 (explaining
that contextual assessments of whether certain programming is


                              37
patently offensive, and therefore actionably indecent, “may
involve . . . analysis of whether the allegedly indecent material
is isolated or fleeting”).

       The Commission took the same approach when
reviewing viewer complaints against a television station for
multiple broadcasts of programs containing expletives, nudity,
and other allegedly indecent material. See WGBH, supra.14
Categorically denying that the programming in WGBH was
actionably indecent,15 the FCC distinguished the facts of WGBH



    14
       Among several broadcasts at issue in WGBH were: (1)
“numerous episodes of Monty Python’s Flying Circus, which
allegedly consistently relie[d] primarily on scatology,
immodesty, vulgarity, nudity, profanity and sacrilege for
humor”; (2) “a program entitled Rock Follies . . . which [the
petitioner] describe[d] as vulgar and as containing profanity”
including “obscenities such as shit, bullshit, etc., and action
indicating some sexually-oriented content in the program”; and
(3) “other programs which allegedly contained nudity and/or
sexually-oriented material.” 69 F.C.C.R. 1250 at ¶ 2 (internal
quotation marks omitted).
   15
      The FCC contends WGBH is inapposite because it was a
license revocation proceeding rather than a direct complaint for
indecency. But its analysis in reaching its decision is
instructive. Because the complainant in WGBH challenged the
broadcaster’s license based on a pattern of allegedly indecent

                               38
from the Carlin monologue in Pacifica by invoking its restrained
enforcement policy for fleeting or isolated material. See 

10 (“We intend strictly to observe the narrowness of the
Pacifica holding. . . . Justice Powell’s concurring opinion . . .
specifically distinguished ‘the verbal shock treatment [in
Pacifica]’ from ‘the isolated use of a potentially offensive word
in the course of a radio broadcast.’ . . . In the case before us,
petitioner has made no comparable showing of abuse by
WGBH-TV of its programming discretion.”); 

10 n.6
(finding that WGBH-TV’s programs “differ[ed] dramatically
from the concentrated and repeated assault involved in
Pacifica”). In its indecency analysis in WGBH, the FCC made
no distinction between words and images (nudity or otherwise).

       As evidence that the FCC’s policy on fleeting material,
as it existed at the time of the Halftime Show, did not
distinguish between words and images, CBS presented several
complaints viewers had submitted to the FCC about allegedly
indecent broadcasts. CBS Letter Br., submitted pursuant to Fed
R. App. P. 28(j) (Aug. 13, 2007). Accompanying each



broadcasts, the Commission expressly answered the threshold
question of whether the broadcasts were indecent. Separate
from the question of whether the broadcaster’s actions were
sufficient to revoke its license, the Commission’s analysis
illustrates that “words” and “depictions” were treated identically
for purposes of determining whether a broadcast was actionably
indecent.

                               39
complaint is a corresponding reply letter by the FCC rejecting
the indecency allegation. Each complaint involves some variety
of sexually explicit imagery. One letter, for example, describes
the early-evening broadcast of a female adult dancer at a strip
club and alleges the broadcast contained visible scenes of the
woman nude from the waist down revealing exposed buttocks
and “complete genital nudity” for approximately five to seven
seconds. Another letter describes in part a Sunday-morning
television broadcast of the movie “Devices and Desires,” which
included “scenes of a topless woman in bed with her lover, with
her breast very clearly exposed, several scenes of a topless
woman running on the beach, and several scenes of a nude
female corpse, with the breasts clearly exposed.”

        Citing Pacifica and the indecency standard used to
review the broadcast of potentially indecent language, the FCC
summarily rejected each of these complaints as “not actionably
indecent.” The FCC contends these “form letters” are irrelevant,
as the letters “do not even explain the grounds for the staff’s
conclusions that the broadcasts were not indecent, much less
rely on the ‘fleeting’ nature of any alleged nudity as a reason for
rejecting the complaints.” FCC Letter Br., submitted pursuant
to Fed R. App. P. 28(j) (Aug. 27, 2007). But the relevance of
the FCC’s rejection letters is not found in their specific reasons
for finding the images not actionably indecent. Rather, the
rejection letters illustrate that the FCC used the identical form
letters and indecency analyses to address complaints of indecent



                                40
nudity that it had long used to address complaints of indecent
language.

        Confronted with this history of FCC enforcement of
restrictions on broadcast indecency, the entirety of which reveals
no distinction in treatment of potentially indecent images versus
words, the FCC nevertheless finds such a distinction evident in
its prior decisions. See, e.g., FCC Br. at 26-27. To support this
view, the FCC offers its Notice of Apparent Liability for
Forfeiture in In re Young Broadcasting of San Francisco, Inc.,
19 F.C.C.R. 1751 (2004), issued four days before CBS’s
broadcast of the Halftime Show. See Reconsideration Order at
¶¶ 10, 36; FCC Br. at 26-27. Young Broadcasting involved a
morning news show segment in which two performers from a
production titled “Puppetry of the Penis” appeared in capes but
were otherwise naked underneath the capes.                  Young
Broadcasting at ¶ 13. The two men, whose act involved
manipulating and stretching their genitalia to simulate various
objects, performed a demonstration of their act with the
agreement of the show’s hosts and at the urging of off-camera
station personnel. 

performance was directed
away from the camera, the penis of one performer was fully
exposed on camera for less than one second as the men turned
away to act out their performance. See 

¶ 12, 13. Based
on these facts, the Commission found the station apparently
liable for a forfeiture penalty for broadcasting indecent material.

16.



                                41
       The FCC contends Young Broadcasting was not a
departure from its prior indecency regime. Rather, as it
explains, Young Broadcasting merely represented the first
instance in which the Commission expressly articulated its pre-
existing (but unstated) policy of treating fleeting images
differently from fleeting words.16 On this view, according to the
FCC, Young Broadcasting should have dispelled any doubts
about the historical breadth of its fleeting material policy prior
to the Halftime Show because it was issued a few days before
CBS’s broadcast. But Young Broadcasting is unavailing for this
purpose. It makes no distinction, express or implied, between
words and images in reaching its indecency determination. To

      16
            Several statements in the FCC’s own press release
announcing the Young Broadcasting Notice of Apparent
Liability belie the agency’s contention here that Young
Broadcasting accorded with its prior policies. See Press
Release, FCC, Comm’n Proposes to Fine Young Broadcasting
of San Francisco, Inc., Statutory Maximum for Apparent
Violation of Indecency Rules (Jan. 27, 2004) (statement of
Chairman Michael K. Powell: “Today, we open another front in
our increased efforts to curb indecency on our nation’s airwaves
. . . .”); 

Commissioner Michael J. Copps: “I am
pleased that this Commission is finally taking an initial step
against indecency on television.”); 

Commissioner Kevin J. Martin: “I hope that this step today
represents the beginning of a commitment to consider each
indecency complaint seriously . . . .”).

                               42
the contrary, it discusses and compares several other FCC
determinations on potentially indecent utterances and depictions,
treating the cases interchangeably and ultimately distinguishing
those cases’ outcomes without any indication that the format of
the offending material was a relevant consideration. See, e.g.,

12 & n.35; 

14.17

      17
         One of the cases the FCC distinguished in Young
Broadcasting was its Notice of Apparent Liability in Flambo
Broadcasting, Inc. (KFMH-FM), 9 F.C.C.R. 1681 (MMB 1994),
which involved “a radio station’s broadcast of sexual material
in a crude joke” that was not found actionably indecent. Young
Broadcasting at ¶ 12 n.35. As with the other cases it discussed
in its Young Broadcasting Notice of Apparent Liability, the FCC
did not draw any distinction between Young Broadcasting and
Flambo Broadcasting based on the subject material there being
words or images. But it did distinguish the two notices of
apparent liability in part because: “assuming that the joke [at
issue in Flambo Broadcasting] was cut off immediately, the
staff of the then-Mass Media Bureau found that it would not
have been actionably indecent because it was brief, live,
unscripted and from an outside source.” Young Broadcasting
at ¶ 12 n.35 (emphasis added). Notably, the facts here – a brief
image of a bare female breast during the live Halftime Show
broadcast resulting from an unscripted stunt by Jackson and
Timberlake – are remarkably similar to the Flambo
Broadcasting fact pattern that the FCC found readily
distinguishable from the actionably indecent material in Young

                               43
       Accordingly, Young Broadcasting does not support the
FCC’s assertion here that its policy on fleeting material had
always excluded images and applied only to words. Young
Broadcasting appears instead to be best understood as the
Commission’s initial effort to abandon its restrained
enforcement policy on fleeting material. While the final
disposition of Young Broadcasting was still unresolved, 18 the


Broadcasting.
    18
       Young Broadcasting was a notice of apparent liability,
which is non-final until the implicated licensee either declines
to dispute the findings in the notice or the licensee’s responsive
opposition is fully adjudicated. See FCC Br. at 13 (describing
content of CBS Notice of Apparent Liability as “tentative
conclusions”); see also 47 U.S.C. § 504(c) (“In any case where
the Commission issues a notice of apparent liability looking
toward the imposition of a forfeiture under this chapter, that fact
shall not be used, in any other proceeding before the
Commission, to the prejudice of the person to whom such notice
was issued, unless (i) the forfeiture has been paid, or (ii) a court
of competent jurisdiction has ordered payment of such
forfeiture, and such order has become final.”). At the time the
Commission issued its Reconsideration Order against CBS and
after its determination in Golden Globes, the question of
whether the broadcast licensee in Young Broadcasting would
contest the Notice of Apparent Liability in that case was still
unresolved. See Reconsideration Order at ¶ 6 n. 25 (indicating

                                44
overarching policy departure that the Commission sought to
accomplish there was effectuated by a combination of its Golden
Globes order and its orders on appeal here. The Commission’s
reasoning in Young Broadcasting is therefore illuminating here.

        In Young Broadcasting, the Commission distinguished
that case’s facts from several of its prior orders. But in so
doing, the Commission overlooked the fact that application of
its fleeting material policy had been a determinative factor in
those prior orders. For example, the licensee in Young
Broadcasting cited for support L.M. Communications, 7
F.C.C.R. 1595 (1992), in which the radio broadcast of a single
expletive was found not actionably indecent.              Young
Broadcasting at ¶ 12 n.35.           The FCC found L.M.
Communications “distinguishable because there was no finding
that the material, in context, was pandering, titillating or
intended to shock the audience.” 

Communications
made no reference to the pandering, titillating or shocking
nature of the subject broadcast material. Rather, it determined
the material was not actionably indecent because the “broadcast
contained only a fleeting and isolated utterance which, within
the context of live and spontaneous programming, does not
warrant a Commission sanction.” L.M. Commc’ns, 7 F.C.C.R.
at 1595.



the status of the Young Broadcasting Notice of Apparent
Liability as “response pending” at the time of the
Reconsideration Order’s issuance).

                              45
         The Commission’s failure to acknowledge the existence
of its prior policy on fleeting material in Young Broadcasting is
illustrative of its approach here. In Young Broadcasting, it read
the policy out of existence by substituting new rationales for its
prior indecency determinations that had applied the policy.
Here, the Commission is foreclosed from adopting the same
approach by its admission in Golden Globes that the fleeting
material policy existed. So it instead apparently seeks to revise
the scope of the policy by contending the policy never included
fleeting images. But extensive precedent over thirty years of
indecency enforcement demonstrates otherwise.

       Our reluctant conclusion that the FCC has advanced
strained arguments to avoid the implications of its own fleeting
indecency policy was echoed by our sister circuit in Fox:

       In [its Omnibus Order], the FCC “reject[s] Fox’s
       suggestion that Nicole Richie’s [use of two
       expletives] would not have been actionably
       indecent prior to our Golden Globes decision,”
       and would only concede that it was “not apparent”
       that Cher’s [use of one expletive] at the 2002
       Billboard Music Awards would have been
       actionably indecent at the time it was broadcast.
       [Id.] at ¶¶ 22, 60. Decisions expressly overruled
       in Golden Globes were now dismissed as “staff
       letters and dicta,” and the Commission even
       implied that the issue of fleeting expletives was
       one of first impression for the FCC in Golden

                               46
       Globes. 

21 (“[I]n 2004, the Commission
       itself considered for the first time in an
       enforcement action whether a single use of an
       expletive could be considered indecent.”).

n.6. When confronted with these
troublesome revisionist arguments, the FCC conceded the
existence of its prior policy. See 

(“[I]n its brief to this
court, the FCC now concedes that Golden Globes changed the
landscape with regard to fleeting expletives.” (citations
omitted)); see also 

(Leval, J., dissenting) (“[The FCC]
made clear acknowledgment that its Golden Globes and Remand
Order rulings were not consistent with its prior standard
regarding lack of repetition.”). But it has made no such
concession here. Faced with extensive evidence to the contrary,
the Commission nevertheless continues to assert that its fleeting
material policy was limited to words and did not exclude
fleeting images from the scope of actionable indecency.

       In sum, the balance of the evidence weighs heavily
against the FCC’s contention that its restrained enforcement
policy for fleeting material extended only to fleeting words and
not to fleeting images. As detailed, the Commission’s entire
regulatory scheme treated broadcasted images and words
interchangeably for purposes of determining indecency.
Therefore, it follows that the Commission’s exception for
fleeting material under that regulatory scheme likewise treated
images and words alike. Three decades of FCC action support
this conclusion. Accordingly, we find the FCC’s conclusion on

                                 47
this issue, even as an interpretation of its own policies and
precedent, “counter to the evidence before the agency” and “so
implausible that it could not be ascribed to a difference in view
or the product of agency expertise.” State 

.

         Because the Commission fails to acknowledge that it has
changed its policy on fleeting material, it is unable to comply
with the requirement under State Farm that an agency supply a
reasoned explanation for its departure from prior policy.19 See
id.; cf. 

(“[F]ailure to come to
grips with conflicting precedent constitutes an [agency’s]
inexcusable departure from the essential requirement of
reasoned decision making.”); LeMoyne-Owen College v. NLRB,

, 61 (D.C. Cir. 2004) (Roberts, J.) (“[W]here, as
here, a party makes a significant showing that analogous cases
have been decided differently, the agency must do more than
simply ignore that argument. . . . The need for an explanation is
particularly acute when an agency is applying a multi-factor test


  19
     In its brief and at oral argument, the Commission continues
to assert it has not changed its policy on fleeting material, yet it
also suggests several reasons why a policy including fleeting
images within the scope of actionable indecency is reasonable.
But see State 

(“[T]he courts may not
accept appellate counsel’s post hoc rationalizations for agency
action. It is well-established that an agency’s action must be
upheld, if at all, on the basis articulated by the agency itself.”
(internal citations omitted)).

                                48
through case-by-case adjudication.”). Consequentially, the
FCC’s new policy of including fleeting images within the scope
of actionable indecency is arbitrary and capricious under State
Farm and the Administrative Procedure Act, and therefore
invalid as applied to CBS.

                                IV.

        The FCC’s arbitrary and capricious change of policy on
the broadcast of fleeting indecent material should be a sufficient
ground to decide this case. But if not, it would appear the
Commission incorrectly determined CBS’s liability for Jackson
and Timberlake’s Halftime Show performance.20 CBS contends
it neither planned Jackson and Timberlake’s offensive actions
nor knew of the performers’ intent to incorporate those actions
into their performance. The FCC does not dispute this assertion,
but it nevertheless seeks to hold CBS liable for the performers’
actions. The Commission offers three theories of liability. First,
the FCC contends the performers’ intent can be imputed to CBS
under the common law doctrine of respondeat superior.
Second, the FCC contends CBS’s unique duties as a broadcast
licensee permit an extension of vicarious liability beyond the
traditional employer-employee scope of respondeat superior.
Third, the FCC contends CBS is directly liable for the
performers’ actions because it “willfully” failed to take adequate
measures to guard against a known risk that indecency might
occur during the Halftime Show.

  20
       This issue was extensively briefed by the parties and amici.

                                 49
        At this juncture, we do not believe these theories provide
grounds for CBS’s liability. Jackson and Timberlake were
independent contractors, who are outside the scope of
respondeat superior, rather than employees as the FCC found.
The First Amendment precludes the FCC from sanctioning CBS
for the indecent expressive conduct of its independent
contractors without offering proof of scienter as an element of
liability. And it is unclear whether the FCC correctly applied a
“willfulness” standard to find CBS liable for failing to prevent
the Halftime Show’s indecency.

                               A.

        The FCC relies primarily on the traditional agency
doctrine of respondeat superior to hold CBS vicariously liable
for the actions of Janet Jackson and Justin Timberlake during
the Halftime Show. The respondeat superior doctrine provides
that “[a]n employer is subject to liability for torts committed by
employees while acting within the scope of their employment.”
Restatement (Third) of Agency § 2.04 (2006); see also 

The doctrine’s “scope is limited to the employment
relationship and to conduct falling within the scope of that
relationship . . . .” 

cmt. b. Here, the parties dispute
whether the conduct giving rise to liability was performed by
CBS’s employees. CBS asserts, and the FCC denies, that
Jackson and Timberlake were independent contractors and
therefore outside the scope of respondeat superior. CBS also
contends respondeat superior is an unsuitable theory of liability



                               50
in the broadcast indecency context and asserts the FCC’s
“novel” adoption of it in this case is improper.

        The federal statutes restricting broadcast indecency, 18
U.S.C. § 1464, and establishing the FCC’s forfeiture penalty
scheme, 47 U.S.C. § 503, are silent on vicarious liability.
Nevertheless, there is sound authority that CBS may be
vicariously liable for the indecent speech or expression of its
employees. See Cantrell v. Forest City Pub. Co., 

,
253-54 (1974) (holding a newspaper publisher “liable under
traditional doctrines of respondeat superior” for a reporter’s
story that contained knowing falsehoods injurious to the privacy
of the subjects of the story); Schiavone Constr. Co. v. Time, Inc.,

, 1089 n.34 (3d Cir. 1988) (“Because [reporter]
Sandy Smith was an employee of Time, Time is responsible for
Smith’s actual malice under a theory of respondeat superior.”
(citing 

; R. Smolla, Law of
Defamation § 3.36 (1986))). Accordingly, if a broadcaster’s
employee violates the indecency provision of 18 U.S.C. § 1464,
as sanctioned through the forfeiture scheme of 47 U.S.C. §
503(b), respondeat superior liability may be permissible.

       But even though the respondeat superior doctrine may
apply in this context, it is limited to the conduct of employees
acting within the scope of their employment. Determining
whether CBS may be liable under respondeat superior first
requires selection of the applicable legal standard for
differentiating an “employee” from an “independent contractor.”
Neither party has adequately analyzed the issue. CBS suggests

                                51
New York law applies, asserting the FCC itself determined in its
orders that a choice-of-law provision included in both
performers’ Halftime Show agreements requires application of
New York law. But it provides no additional argument in
support of applying New York law. The Commission denies it
ever made this determination in its orders, instead urging
application of “federal law,” but without elaborating or
specifying the applicable legal standard.

       As CBS states, the Commission, in its orders in this case,
referenced the choice-of-law provisions in the Jackson and
Timberlake performance agreements. See Forfeiture Order at
¶ 25 n.88; Reconsideration Order at ¶ 27 n.90. But those
references by the Commission, read in context, were not
determinations of what law should apply here. Rather, as it
asserts, the FCC cited New York law as one non-exhaustive
example of “courts applying common law agency principles.”
Reconsideration Order at ¶ 27. And its references to the choice-
of-law provisions in the performers’ agreements were included
only for the purpose of adding weight to its citations to New
York law in this regard.

       Moreover, the choice-of-law provisions in the Jackson
and Timberlake performance agreements only select New York
contract law. The provisions, which are identical in the two
agreements, read: “CHOICE OF LAW: This Agreement and all
matters or issues collateral thereto shall be governed by the laws
of the State of New York applicable to contracts executed and
to be performed entirely therein.” The plain text of these

                               52
contract provisions select “the laws of the State of New York
applicable to contracts” – that is, New York contract law – in all
disputes central or collateral to the contract. Respondeat
superior is a principle of agency law. Were the present case a
matter of interpreting the construction or validity of contractual
provisions, New York law might well apply. But we read the
contract as silent on applicable agency law, and CBS has not
offered any further explanation to support a finding to the
contrary.

       Furthermore, even if the choice-of-law provisions had
been inclusively drafted to select all categories of New York
law, or if the “matters or issues collateral thereto” language of
the choice-of-law provisions could be interpreted to cover this
case, our conclusion would be the same. The regulation of
broadcast indecency is the province of the federal government.21


   21
     The FCC possesses broad authority to regulate television
broadcasters, which operate as licensees subject to federal rules.
Some of those rules, such as the indecency restrictions
implicated here, appear to leave little room for regulation by the
States. See Allen B. Dumont Labs. v. Carroll, 

, 156
(3d Cir. 1950) (invalidating a regulation of the Pennsylvania
State Board of Censors, which required that all motion picture
films intended to be broadcast by television in Pennsylvania be
submitted to the Board for censorship purposes, because federal
provisions on broadcast indecency, profanity and obscenity
preempted state censorship rules).

                               53
Whether or not an agent was an “employee” of its principal – for
the specific purpose of determining liability under the broadcast
indecency regime – depends on the definition the federal
government assigns to the term “employee” under its
administrative scheme. No state’s law may alter the scope or
nature of liability for broadcast indecency by supplying an
alternate definition.

        Accordingly, we believe the FCC’s contention that
“federal law” applies is correct. Liability here arises under a
federal regulatory scheme, and defining the boundaries of
permissible vicarious liability under that scheme is likewise a
federal matter. To hold otherwise would create opportunities for
broadcasters to evade liability for broadcast indecency through
artful drafting of contracts and would frustrate the federal
government’s intention of crafting uniform national rules
restricting the transmission of indecent and obscene material
over public airwaves. Cf. Cmty. for Creative Non-Violence v.
Reid, 

, 740 (1989) (“Establishment of a federal rule
of agency, rather than reliance on state agency law, is
particularly appropriate here given the [Copyright Act of
1976]’s express objective of creating national, uniform
copyright law by broadly pre-empting state statutory and
common-law copyright regulation.”). The question is how to
define the scope and substance of the vicarious liability rule here
– a uniform federal rule on a broadcaster’s liability for its own
agents’ indecent acts.



                                54
       In analogous situations requiring a determination of
vicarious liability under a uniform, nationally-applicable law,
the Supreme Court has looked to the general common law of
agency rather than the law of any particular state:

       The Act nowhere defines the terms “employee” or
       “scope of employment.” It is, however, well
       established that where Congress uses terms that
       have accumulated settled meaning under the
       common law, a court must infer, unless the statute
       otherwise dictates, that Congress means to
       incorporate the established meaning of these
       terms. In the past, when Congress has used the
       term “employee” without defining it, we have
       concluded that Congress intended to describe the
       conventional master-servant relationship as
       understood by common-law agency doctrine. . . .
       [W]hen we have concluded that Congress
       intended such terms as “employee,” “employer,”
       and “scope of employment” to be understood in
       light of agency law, we have relied on the general
       common law of agency, rather than on the law of
       any particular State, to give meaning to these
       terms.

(interpreting use of the term
“employee” in the Copyright Act of 1976, to ascertain whether
a work was prepared by an employee or independent contractor,
which is part of the determination of whether work is “for hire”

                              55
under the Act) (internal quotations and citations omitted); see
also Nationwide Mut. Ins. Co. v. Darden, 

, 323 n.3
(1992) (“As in Reid, we construe the term [‘employee’ in
ERISA, 29 U.S.C. § 1002(6),] to incorporate ‘the general
common law of agency, rather than . . . the law of any particular
State.” (quoting 

)). Unlike in Reid or
Darden, here we do not review a statutory scheme in which
Congress expressly used the terminology of agency law. The
relevant provisions of 18 U.S.C. § 1464 and 47 U.S.C. § 503(b)
do not include terms such as “employee” or “scope of
employment.”       But the respondeat superior doctrine’s
application in the broadcast indecency context is premised on
the notion that some form of vicarious liability under these
statutes was implicitly authorized by Congress.

       Drawing on Reid and Darden for guidance, we agree
with the FCC that the general common law of agency supplies
the appropriate standard for determining whether Jackson and
Timberlake were employees of CBS where Congress has not
provided specific direction on the scope of vicarious liability in
this context. In Darden, the Court described Reid as requiring
a “presumption that Congress means an agency law definition
for ‘employee’ unless it clearly indicates otherwise . . . .”

(citations omitted). The Court’s
rationale is based on Congress’s creation of vicarious liability
without defining the scope of that liability – not whether magic
words have been included in the statute:



                               56
       ERISA’s nominal definition of “employee” as
       “any individual employed by an employer,” 29
       U.S.C. § 1002(6), is completely circular and
       explains nothing. As for the rest of the Act,
       Darden does not cite, and we do not find, any
       provision either giving specific guidance on the
       term’s meaning or suggesting that construing it to
       incorporate traditional agency law principles
       would thwart the congressional design or lead to
       absurd results. Thus, we adopt a common-law
       test for determining who qualifies as an
       “employee” under ERISA, a test we most recently
       summarized in Reid . . . .

(footnote omitted). The Darden rationale applies with
equal force here. Assuming Congress authorized vicarious
liability at all under 18 U.S.C. § 1464 and 47 U.S.C. § 503(b),
its implicit authorization by definition lacks specificity. There
is little difference between implicit adoption of a rule and the
explicit but “circular” and uninformative inclusion of agency
law terminology in statutory text.

         Moreover, the Court in Reid explained that the practice
of relying on the general common law of agency, rather than the
law of any particular state, “reflects the fact that ‘federal statutes
are generally intended to have uniform nationwide application.’”
 

(quoting Miss. Band of Choctaw Indians v. Holyfield,

, 43 (1989)). CBS has not offered any reason why
this rule should not inform our interpretation of the federal

                                 57
government’s regulatory scheme for broadcast indecency. 22

  22
    The Supreme Court has noted the breadth and uniformity of
the FCC’s federal regulatory regime for the broadcast industry:
      The Commission’s authority to regulate
      broadcasting and other communications is derived
      from the Communications Act of 1934, as
      amended. The Act’s provisions are explicitly
      applicable to “all interstate and foreign
      communication by wire or radio . . . .” 47 U.S.C.
      § 152(a). The Commission’s responsibilities are
      no more narrow: it is required to endeavor to
      “make available . . . to all the people of the United
      States a rapid, efficient, Nation-wide, and
      world-wide wire and radio communication service
      . . . .” 47 U.S.C. § 151. The Commission was
      expected to serve as the “single Government
      agency” with “unified jurisdiction” and
      “regulatory power over all forms of electrical
      communication, whether by telephone, telegraph,
      cable, or radio.” It was for this purpose given
      “broad authority.” As this Court emphasized in
      an earlier case, the Act’s terms, purposes, and
      history all indicate that Congress “formulated a
      unified and comprehensive regulatory system for
      the (broadcasting) industry.” FCC v. Pottsville
      Broad. Co., 

, 137 (1940).
United States v. Sw. Cable Co., 

, 167-68 (1968)

                              58
Accordingly, we agree with the FCC that respondeat superior
liability for violations of 18 U.S.C. § 1464, as sanctioned
through 47 U.S.C. § 503(b) forfeiture penalties, “should be
understood in light of the general common law of agency,” 

. And under the common law, respondeat
superior is limited to the employer-employee relationship.

       In Reid, the Court set forth a test, incorporating the
Restatement definition of “employee,” for determining who
qualifies as an “employee” under the common law:

       In determining whether a hired party is an
       employee under the general common law of
       agency, we consider the hiring party’s right to
       control the manner and means by which the
       product is accomplished. Among the other
       factors relevant to this inquiry are the skill
       required; the source of the instrumentalities and
       tools; the location of the work; the duration of the
       relationship between the parties; whether the
       hiring party has the right to assign additional
       projects to the hired party; the extent of the hired
       party’s discretion over when and how long to
       work; the method of payment; the hired party’s
       role in hiring and paying assistants; whether the
       work is part of the regular business of the hiring


(footnotes omitted).


                               59
       party; whether the hiring party is in business; and
       the tax treatment of the hired party.

(internal quotations and citations omitted).

        While establishing that all of these factors are relevant
and that “no one of these factors is determinative,” 

Reid did not provide guidance on the relative weight each factor
should be assigned when performing a balancing analysis. But
the Court has indicated that determining the appropriate balance
is a case-specific endeavor:

       There are innumerable situations which arise in
       the common law where it is difficult to say
       whether a particular individual is an employee or
       an independent contractor . . . . In such a situation
       . . . there is no shorthand formula or magic phrase
       that can be applied to find the answer, but all of
       the incidents of the relationship must be assessed
       and weighed with no one factor being decisive.
       What is important is that the total factual context
       is assessed in light of the pertinent common-law
       agency principles.

NLRB v. United Ins. Co. of Am., 

, 258 (1968)
(footnote omitted). Other courts have followed this approach.
See, e.g., Carter v. Helmsley-Spear, Inc., 

, 85 (2d Cir.
1995) (“[T]he [Reid] factors are weighed by referring to the
facts of a given case.” (citing Aymes v. Bonelli, 

,
861 (2d Cir. 1992))).

                                60
       Accordingly, all of the Reid factors are relevant, and no
one factor is decisive, but the weight each factor should be
accorded depends on the context of the case. Some factors will
have “little or no significance in determining whether a party is
an independent contractor or an employee” on the facts of a
particular case. 

; see Marco v. Accent
Publ’g Co., 

, 1552 (3d Cir. 1992) (noting that
three Reid factors were “indeterminate” on the facts of the case
and according those factors little or no weight in applying Reid’s
balancing test).23

   23
     In Aymes, the Second Circuit offered an example of how
the facts of a case might diminish the significance of a Reid
factor:
        The [Reid] factors should not merely be tallied but
        should be weighed according to their significance
        in the case.
                For example, the factors relating to the
        authority to hire assistants will not normally be
        relevant if the very nature of the work requires the
        hired party to work alone. In such a case, that
        factor should be accorded no weight in applying
        the Reid test. Having the authority to hire
        assistants, however, might have great probative
        value where the individual claiming to be an
        independent contractor does exercise authority to
        enlist assistants without prior approval of the
        party that hired him. In the latter case, this show

                               61
       In the present case, the FCC erred by failing to consider
several important Reid factors when determining whether
Jackson and Timberlake were employees of CBS. And rather
than balancing those factors it did consider, the Commission
focused almost exclusively on CBS’s right of control over the
performers. See FCC Br. at 42 (“The critical factor of control
weighs so heavily in favor of a conclusion that Jackson and
Timberlake were CBS’s employees that, as the Commission
reasonably determined, consideration of that factor alone is



        of authority would be highly indicative that the
        hired party was acting as an independent
        contractor.

. The court went on to specify five Reid
factors that “will be significant in virtually every situation” and
“should be given more weight in the analysis, because they will
usually be highly probative of the true nature of the employment
relationship.” 

according to the court, include:
“(1) the hiring party’s right to control the manner and means of
creation; (2) the skill required; (3) the provision of employee
benefits; (4) the tax treatment of the hired party; and (5) whether
the hiring party has the right to assign additional projects to the
hired party.” 

that these factors will almost always
be critical in determining whether a hired party is an employee
or independent contractor. But we reiterate that the proper
weight to be accorded any Reid factor is dependent on its
significance in the relevant case.

                                62
‘decisive.’” (citing Reconsideration Order at ¶ 27)).24 Although
the right-to-control factor is usually significant in determining
em ploym ent status, the Com m ission assigned it
disproportionate, even dispositive, weight here. But Reid
stresses contextual balancing, with no one factor decisive. See

(rejecting an application of the Reid

   24
      In its Reconsideration Order, the Commission explained
that “every aspect of the performance, including the exact time,
length, location, material, set, script, staging, and wardrobe, was
subject to the control of Viacom/CBS through its corporate
affiliate MTV.” 

26. The Commission went on to state:
        We recognize that some of the common law
        factors are not indicative of agency. Again,
        however, the relative weight of common law
        factors varies according to the legal context in
        which the agency issue arises. The central issue
        here is the parties’ relationship for the specific
        purpose of imposing vicarious liability for the
        performers’ actions in [the Halftime Show]
        performance that were harmful to the public
        ( ra th e r th a n f o r c o p yr ig h t, w o r k e r s’
        compensation, anti-discrimination or other
        purposes). In this context, the Commission
        properly concluded that the evidence clearly
        demonstrating Viacom/CBS’s right to control the
        halftime show performance was decisive.

27 (footnote omitted).

                                63
test that gave “disproportionate consideration” to the factor of
control, reiterating that no single factor is dispositive of
employee status, and instructing that “courts should keep this
factor [of control] in perspective”). Accordingly, we will review
the Reid factors, weighed in light of the context of this case, to
determine whether Jackson and Timberlake were employees or
independent contractors of CBS.25

   25
      On appellate review, the findings of fact constituting each
relevant Reid factor are afforded significant deference under the
Administrative Procedure Act (“APA”). But balancing those
factors to determine employment status is a question of law
traditionally accorded no deference. See 

(“[W]e exercise plenary review of the . . . application of
the law of agency to the facts.” (citations omitted)); 

(describing the question of whether a hired party
is an employee or independent contractor as a “legal conclusion”
and engaging in de novo balancing of the Reid factors); 

-64 (same).
        In the past, we have held that agency determinations on
questions of law not within the agency’s expertise – such as the
FCC’s determination here on employment status – receive less
deference under the APA than other agency conclusions. See
Nat’l Indus. Sand Ass’n v. Marshall, 

, 699 n.34 (3d
Cir. 1979) (“A court may decide all relevant questions of law
[d]e novo under the standard set forth in 5 U.S.C. [§]
706(2)(A).” (citation omitted)). Other courts have agreed. See,
e.g., Wolfe v. Barnhart, 

, 1100 (10th Cir. 2006)

                               64
(“When we review an agency’s decision under the APA’s
arbitrary, capricious or abuse of discretion standard, our review
is narrow and deferential . . . . However, these limitations do
not apply to questions of law.” (citations and internal quotation
omitted)); Davidson v. Glickman, 

, 1000 (5th Cir.
1999) (“Under the APA, we review questions of law de novo,
without deference to the agency’s conclusions.” (citations
omitted)); Wagner v. Nat’l Transp. Safety Bd., 

, 930
(9th Cir. 1996) (“Purely legal questions are reviewed de novo.”
(citation omitted)); Texas E. Prods. Pipeline Co. v.
Occupational Safety and Health Review Comm’n, 

,
47 (7th Cir. 1987) (“For questions of law, the APA on its face
mandates de novo review.” (citing the text of 5 U.S.C. § 706:
“To the extent necessary to decision and when presented, the
reviewing court shall decide all relevant questions of law . . . .”)
(additional citation omitted)); Artesian Indus., Inc. v. Dep’t of
Health and Human Servs., 

, 1006 (D.D.C.
1986) (“Based on the express language of the APA, the arbitrary
and capricious standard applies only to ‘actions, findings and
conclusions,’ by an agency, excluding any questions of law.
The APA explicitly empowers reviewing courts to decide ‘all
relevant questions of law,’ and the United States Court of
Appeals for the District of Columbia Circuit has construed this
language to mean what it says–questions of law are to be
decided by courts, not agencies.” (citations and footnotes
omitted)).

                                65
        Only three factors weigh in favor of a determination that
Jackson and Timberlake were employees of CBS. First, CBS is
in business, which “increases the possibility that it would
employ people.” 

. Second, CBS
regularly produces shows for national broadcast in the course of
its business. Both factors are relatively insignificant on balance.


        Here, we need not resolve whether de novo review of the
FCC’s application of the Reid test is appropriate. It is true the
FCC has no unique expertise in determining whether a broadcast
licensee’s agent is an employee or independent contractor under
the general common law of agency. But even under the APA’s
traditionally deferential standard, we “hold unlawful and set
aside” agency conclusions that are “not in accordance with law.”
5 U.S.C. § 706(2)(A). And the FCC’s conclusion on the
performers’ employment status, by placing dispositive weight on
the single factor of CBS’s right to control, is contrary to settled
law under Reid. See 

(rejecting an
application of the Reid test that gave “disproportionate
consideration” to the factor of control, reiterating that no single
factor is dispositive of employee status, and instructing that
“courts should keep this factor [of control] in perspective”).
Moreover, the FCC failed to consider several relevant Reid
factors – an error the Supreme Court has described as sufficient
to render an agency’s conclusions “arbitrary and capricious”
under the APA. See State 

(describing an
agency’s “fail[ure] to consider an important aspect of [a]
problem” as “arbitrary and capricious” under the APA).

                                66
See 

a hiring party might “easily accomplish its
regular business by using independent contractors rather than
employees”); 

(according factor of
whether hiring party is in business “negligible” weight, noting
it “will always have very little weight in this analysis” and “will
generally be of little help”).

        Third, and most significant to its argument, is the factor
the FCC focused on in its orders: CBS’s right to control the
manner and means by which Jackson and Timberlake
accomplished their Halftime Show performance. As the FCC
contends, CBS, through its corporate affiliates, supervised the
Halftime Show and retained the right to approve all aspects of
the show’s performances. But it is undisputed that CBS’s actual
control over the Halftime Show performances did not extend to
all aspects of the performers’ work. The performers, not CBS,
provided their own choreography and retained substantial
latitude to develop the visual performances that would
accompany their songs. Similarly, as the FCC notes, CBS
personnel reviewed the performers’ selections of set items and
wardrobes, but the performers retained discretion to make those
choices in the first instance and provided some of their own
materials.26


   26
     Furthermore, the FCC, asserting that CBS “scripted every
word uttered on stage,” appears to overstate CBS’s scripting
role. The record indicates the performers – and Jackson in
particular – had a role in selecting songs to be performed at the

                                67
       We reviewed a comparable set of facts in Marco, where
we held a photographer was an independent contractor even
though the hiring party, a magazine, exercised significant
“control over the details of the work.” 

.
There, the magazine “supplied jewelry, props, models, sketches
intended to describe the exact composition of the photographs,
and, at some sessions, an Art Director.” 

the
magazine “controlled . . . the subject matter and composition of
the images,” we noted that other aspects of the work –
“including the choice of light sources, filters, lenses, camera,
perspective, aperture setting, shutter speed, and processing
techniques” – were not under the magazine’s control. 

Moreover, the Art Director – although exercising
supervisory control – only supervised “some” of the sessions,
and his “supervision was limited to subject matter, composition,
and ‘mood.’” 

       Here, as in Marco, CBS’s control was extensive but not
determinative of employment. Even though a principal’s right
to control is an important factor weighing in favor of a
determination that an employment relationship existed, it is not
dispositive when considered on balance with the rest of the Reid




show, all of which were previously recorded by the performers.
Moreover, the songs were revised by the performers and their
assistants to accommodate extra vocalists, time constraints, and
other unique aspects of the Halftime Show performances.

                              68
factors. Of the remaining factors significant on the facts here,27
all are strongly indicative of Jackson and Timberlake’s
independent contractor status. First, it is undisputed that both
Jackson and Timberlake were hired for brief, one-time
performances during the Halftime Show; CBS could not assign
more work to the performers.28           Second, Jackson and


   27
     Some Reid factors carry little or no weight in our analysis
because they are indeterminate on the facts. See 

(finding some factors indeterminate based on the
facts of that case). The extent of the performers’ “discretion
over when and how long to work” is unclear. Their
performance agreements require certain scheduled appearances
and rehearsals, including the Halftime Show itself, but the
record indicates the performers were free to (and did) complete
additional preparations at their own discretion. Similarly, the
record is inconclusive on the location of the performers’ work
– some of which was on set and scheduled, and some of which
was off set and unscheduled.
  28
       This factor is accorded great weight under the common law:
          In general, employment contemplates a
          continuing relationship and a continuing set of
          duties that the employer and employee owe to
          each other. Agents who are retained as the need
          arises and who are not otherwise employees of
          their principal normally operate their own
          business enterprises and are not, except in limited

                                69
Timberlake selected and hired their own choreographers, backup
dancers, and other assistants without any involvement on the
part of CBS. Third, Jackson and Timberlake were compensated
by one-time, lump-sum contractual payments and “promotional
considerations” rather than by salaries or other similar forms of
remittances, without the provision of employee benefits. Fourth,
the skill required of a performer hired to sing and dance as the
headlining act for the Halftime Show – a performance during a
Super Bowl broadcast, as the FCC notes, that attracted nearly 90
million viewers and was the highest-rated show during the 2003-
04 television season – is substantial even relative to the job of
a general entertainer, which is itself a skilled occupation.

       Also weighing heavily in favor of Jackson and
Timberlake’s status as independent contractors is CBS’s
assertion in its briefs, which the FCC does not refute, that it paid
no employment tax. Had the performers been employees rather



       respects, integrated into the principal’s enterprise
       so that a task may be completed or a specified
       objective accomplished. Therefore, respondeat
       superior does not apply.
Restatement (Third) of Agency § 2.04 cmt. b (2006); see also

(describing the hiring party’s right to
assign additional work as one of five Reid factors, along with
control, to be “given more weight in the analysis, because [it]
will usually be highly probative of the true nature of the
employment relationship”).

                                70
than independent contractors, federal law would have required
CBS to pay such taxes. See, e.g., Enochs v. Williams Packing
& Nav. Co., 

, 3 (1962) (citing statutory provisions
requiring employers to pay Social Security taxes of their
employees); McDonald v. S. Farm Bureau Life Ins. Co., 

, 721 (11th Cir. 2002) (explaining the FICA tax
scheme, which requires employers to share the FICA tax
liabilities of their employees but not of their independent
contractors).

        Finally, there is no evidence that Jackson, Timberlake, or
CBS considered their contractual relationships to be those of
employer-employee. In Reid, the Court incorporated the
Restatement, describing it as “setting forth a nonexhaustive list
of factors relevant to determining whether a hired party is an
employee” under the common law of 

.
Among the factors not explicitly listed in Reid, but included in
the Restatement, is the parties’ understanding of their
contractual relationship. See Restatement (Third) of Agency §
7.07 cmt. f (including as an explicit factor in determining
employment status “whether the principal and the agent believe
that they are creating an employment relationship”). Although
the Commission did not inquire into this factor, it should have
been a significant consideration in this case. Under the FCC’s
rationale, band members contracted to play a one-song set on a
talk show or a “one-show-only” televised concert special
presumably would be employees of the broadcaster. These
performers – who frequently promote their work through brief


                               71
contractual relationships with media outlets – would be
“employees” of dozens of employers every year. Accordingly,
it is doubtful that either the performers here or CBS believed
their contracts created employment relationships. Nevertheless,
given the lack of a developed record on this factor, we will not
accord it significant weight in our analysis.

        On balance, the relevant factors here weigh heavily in
favor of a determination that Jackson and Timberlake were
independent contractors rather than employees of CBS. The
Commission erred in according the right-to-control factor
disproportionate weight and in treating it as determinative
without considering several significant factors weighing against
it. Cf. 

(“Examining the circumstances of
this case in light of these factors, we agree . . . that Reid was not
an employee of CCNV but an independent contractor. True,
CCNV members directed enough of Reid’s work to ensure that
he produced a sculpture that met their specifications. But the
extent of control the hiring party exercises over the details of the
product is not dispositive. Indeed, all the other circumstances
weigh heavily against finding an employment relationship.”). In
sum, both performers were acting as independent contractors for
the limited purpose of providing entertainment services for one
isolated, brief program. Accordingly, the doctrine of respondeat
superior does not apply on these facts.




                                 72
                                B.

        Although vicarious liability is traditionally limited to the
employer-employee scope of respondeat superior, the FCC
proffers an alternative theory of liability under which CBS may
be held vicariously liable for its independent contractors’ actions
based on its duties as a broadcast licensee. The FCC contends
CBS is vicariously liable for Jackson and Timberlake’s actions
during the Halftime Show – irrespective of their status as
independent contractors – because broadcast licensees hold non-
delegable duties to avoid the broadcast of indecent material and
to operate in the public interest. CBS disputes the validity of
this theory as applied to them, contending it functionally creates
a strict liability standard for broadcast indecency and therefore
unconstitutionally eliminates the scienter element of the
indecency provisions of 18 U.S.C. § 1464 and 47 C.F.R. §
73.3999(b).

                                 1.

        Broadcast licensees hold several duties as conditions of
maintaining their licenses. There are good reasons to hold a
broadcaster strictly liable for complying with licensing rules.
Broadcasters have the right and the capability to control the
manner in which they operate and conduct their business as
licensees on the public airwaves. It may be argued that anything
less than strict liability may relieve broadcasters of responsibility
and undermine their willingness to exercise vigilance.



                                 73
        In some contexts, these reasons have led the FCC to
adopt and enforce strict liability for broadcasters’ violations of
its rules and regulations. The Commission has cited several of
these cases in support of its determination of CBS’s liability.29

   29
      See, e.g., Forfeiture Order at ¶ 23 n.80 (citing In re Liab.
of Wagenvoord Broad. Co., Licensee of Station WVOG, New
Orleans, LA, 35 F.C.C.2d 361 (1972); In re Enure Family Ltd.
P’ship, 17 F.C.C.R. 7042, 7044 (FCC Enforcement Bureau
2002)) (additional citations omitted). Wagenvoord held a
broadcast licensee liable where an independent contractor
“consulting engineer negligently provided erroneous advice that
resulted in the violations of the station's presunrise
authorization.” See Wagenvoord at ¶ 3. Similarly, Enure
Family Limited Partnership held a broadcast licensee liable
where an independent contractor violated FCC rules by failing
to properly monitor the beacon light on an antenna structure and
notify the licensee of an outage. See Enure Family Ltd. P’ship
at ¶ 7. Other FCC cases on point are likewise directed towards
broadcast licensees’ delegation of technical and operational
duties. See, e.g., In re Application for Review of Liab. of MTD,
Inc., Permittee of Station KWMW(FM), Maljamar, NM, 6
F.C.C.R. 34, ¶ 5 (1991) (holding licensee liable for independent
contractor’s violation of Commission’s tower lighting rule); In
re Liab. of Sundial Broad. Corp., Licensee of Station
KDFC(FM), San Francisco, CA, 30 F.C.C.2d 949 (1971)
(holding licensee liable for an independent contractor engineer’s
failure to make equipment performance measurements within

                               74
But unlike the facts in this case, all of the cases cited by the FCC
address situations in which a third party steps into the shoes of
a broadcaster, performing the broadcaster’s duties by operating
stations, maintaining equipment, or otherwise filling the
broadcaster’s role as a licensee. Essentially, these cases prohibit
licensees from avoiding liability by delegating aspects of the
operation and control of broadcasting facilities or equipment to
third-party independent contractors.

      But the Commission has cited no authority for the
proposition that a broadcaster may be vicariously liable for the
speech or expression of its independent contractors.30 Cases



the time period required by the Commission).
     30
       Cantrell is inapposite for this purpose. Central to the
Court’s holding in Cantrell was the status of the reporter as an
employee acting within the scope of his employment. See

(“[There] was sufficient evidence for
the jury to find that Eszterhas’ writing of the feature was within
the scope of his employment at the Plain Dealer and that Forest
City Publishing Co. was therefore liable under traditional
doctrines of respondeat superior.” (footnote omitted)); see also
McFarlane v. Esquire Magazine, 

, 1302 (D.C. Cir.
1996) (“The writer in question [in Cantrell] was an employee of
the corporate defendant, and, although the trial court had given
an instruction somewhat muddling the categories of employee
and agent, no one had objected. So Cantrell presented no

                                75
concerning the operation or maintenance of broadcasting
stations are inapposite to a determination of the scope of a
licensee’s liability for the content of its programming. A
broadcast licensee’s relationships with the performers it hires to
create the content of its broadcasts are as a factual matter
significantly different than those in which a third party steps into
the licensee’s shoes to perform requisite maintenance on
broadcast equipment or similar operational duties. Moreover,
the nature of a licensee’s duty with respect to broadcast content
implicates different legal considerations than do its duties with
respect to the operation of its stations or equipment. Unlike the
Commission’s prior cases on the operational and managerial
aspects of broadcasting, the imposition of liability for the
content of programming necessarily implicates the First
Amendment. For example, an unwitting broadcaster might be
held liable for its independent contractor’s negligence in
monitoring and maintaining a tower antenna without raising a
constitutional question. But the same cannot be said of
imposing liability for the speech or expression of independent
contractors. Cf. 

(“[A]ctual malice
is a First Amendment protection predicated on a subjective state
of mind, which surely cuts against any extension of vicarious
liability beyond respondeat superior. . . . [W]e doubt that actual
malice can be imputed except under respondeat superior . . . .”).


occasion for the Court to address the issue of when the mental
state of non-employee agents may be imputed to the principal.”
(citations omitted)).

                                76
                                2.

        Broadcast licensees’ duties with respect to the content of
broadcast material are defined by statute under 18 U.S.C. § 1464
and by the corresponding agency rule, 47 C.F.R. § 73.3999(b).
The Commission correctly asserts that a licensee may not
sidestep its obligations under these provisions, including the
licensee’s duty to avoid the broadcast of indecent material,
through routine delegation to third parties.             And the
Commission’s practical concerns underscoring the need for
strict liability are meritorious. But because these provisions
sanction the content of speech or expression, the First
Amendment precludes a strict liability regime for broadcast
indecency. The First Amendment requires that the FCC prove
scienter when it seeks to hold a broadcaster liable for indecent
material. In the case of scripted or pre-recorded indecent
material, the scienter element likely would be satisfied. But
when the indecent material is unscripted and occurs during a
live broadcast, as in the Halftime Show, a showing of scienter
must be made on the evidence.

        It is a well-established constitutional requirement that in
the few areas where the government may lawfully enforce
content-based restrictions on speech and expression, liability
may not be imposed on a speaker without proof of scienter. See,
e.g., In re Grand Jury Matter, Gronowicz, 

, 988
(3d Cir. 1985) (en banc) (“In the post-publication [punishment
of the dissemination of conscious falsehoods] setting, . . .
accomodation to the first amendment protection of free

                                77
expression is made by scienter requirements . . . .”). Non-
obscene child pornography, for instance, can be restricted when
adult pornography cannot because the State’s compelling
interest in protecting children outweighs conflicting First
Amendment interests. New York v. Ferber, 

(1982); United States v. Cochran, 

, 58 (3d Cir. 1994).
But statutes criminalizing child pornography must require proof
of scienter to withstand constitutional scrutiny. 

; see 

. Proof of scienter is
necessary even where the prohibited category of speech or
expression is unprotected by the First Amendment. In Smith v.
California, 

(1959), the Supreme Court set forth a
constitutional rule that convictions under statutes prohibiting
obscenity cannot be sustained without proof of the defendant’s
scienter. As the Court discussed in Smith, a contrary rule would
risk chilling protected speech. 

The rule
announced in Smith has been reaffirmed repeatedly by the Court.
See, e.g., Osborne v. Ohio, 

, 115 (1990); Hamling
v. United States, 

, 123 (1974); Ginsberg v. New
York, 

, 644 (1968); Mishkin v. New York, 

, 511 (1966).

       The FCC contends its broadcast indecency regime, as a
civil enforcement mechanism, is distinguishable from Smith,
which reviewed convictions under criminal statutes. But the
Supreme Court rejected a similar argument in Manual
Enterprises, Inc. v. Day, 

(1962). See 

(“[T]his Court’s ground of decision in Smith v. California . . .


                              78
indicates that a substantial constitutional question would arise
were we to construe [a statute proscribing obscene advertising]
as not requiring proof of scienter in civil proceedings.”); cf. New
York Times Co. v. Sullivan, 

, 277 (1964) (“What a
State may not constitutionally bring about by means of a
criminal statute is likewise beyond the reach of its civil law of
libel. The fear of damage awards . . . may be markedly more
inhibiting than the fear of prosecution under a criminal
statute.”); 

(“No distinction having
any first amendment significance can be made between libel,
civil or criminal, and fraud, civil or criminal. In both libel and
fraud, post-publication sanctioning occurs because of a
falsehood made with the requisite state of mind.”). We agree
with other courts that “‘any statute that chills the exercise of
First Amendment rights must contain a knowledge element.’”
Am.-Arab Anti-Discrimination Comm. v. City of Dearborn, 

, 611 (6th Cir. 2005) (quoting Video Software Dealers
Ass’n v. Webster, 

, 690 (8th Cir. 1992)).

       Moreover, indecency is protected by the First
Amendment, whereas the constitutional rule of Smith applied to
obscenity, an unprotected form of speech. If liability for
obscenity may lie only where scienter is proven, then liability for
higher-value speech must depend on a showing of some
quantum of scienter at least as significant. The government’s
authority to restrict constitutionally protected speech or
expression can be no greater than its authority to restrict
unprotected speech or expression. See Florida Star v. B.J.F.,


                                79


, 539 (1989) (“Nor is there a scienter requirement
of any kind under [Florida Stat.] § 794.03[, which proscribes the
dissemination through mass communication of the name of a
sexual assault victim’s name,] engendering the perverse result
that truthful publications challenged pursuant to this cause of
action are less protected by the First Amendment than even the
least protected defamatory falsehoods . . . .”).

        Accordingly, the statutory prohibition of broadcast
indecency, 18 U.S.C. § 1464, should be read to include a
scienter element. Other courts have agreed. In Tallman v.
United States, 

(7th Cir. 1972), the United States
Court of Appeals for the Seventh Circuit held scienter is a
necessary ingredient of an offense under 18 U.S.C. § 1464. 

In a companion case, the court described its Tallman
holding as “conclud[ing] that scienter is a pertinent and
necessary element for conviction under [18 U.S.C.] § 1464 . . .
.” United States v. Smith, 

, 1128 (7th Cir. 1972).
Similarly in Gagliardo v. United States, 

(9th Cir.
1966), the United States Court of Appeals for the Ninth Circuit,
reviewing a conviction for violating the obscenity provision of
18 U.S.C. § 1464, described the defendant’s intent as a “very
pertinent and necessary element” for conviction under the
statute. 

       Because it also grounded CBS’s forfeiture liability in a
violation of the indecency provisions of 47 C.F.R. § 73.3999,
the agency’s administrative rule on broadcast indecency, the
FCC contends the scienter element requisite to 18 U.S.C. § 1464

                               80
is not necessarily an impediment here. The rule provides that
“[n]o licensee of a radio or television broadcast station shall
broadcast on any day between 6 a.m. and 10 p.m. any material
which is indecent.” 

title of 47 C.F.R. § 73.3999,
“Enforcement of 18 U.S.C. § 1464 (restrictions on the
transmission of obscene and indecent material),” seems to
indicate that the rule merely enforces 18 U.S.C. § 1464 and does
not serve as an independent prohibition on indecency in
broadcasting.

        The history of Rule 73.3999 further shows that the
indecency element of the rule is identical to that of 18 U.S.C. §
1464. In 1988, Congress directed the FCC to “promulgate
regulations in accordance with section 1464, title 18, United
States Code, to enforce the provisions of such section on a 24
hour per day basis.” An Act Making Appropriations for the
Departments of Commerce, Justice, and State, Pub. L. No. 100-
459, § 608, 102 Stat. 2186, 2228 (1988). On December 28,
1988, the FCC complied by adopting 47 C.F.R. § 73.3999,
which provided in its entirety that “[t]he Commission will
enforce the provisions of section 1464 of the United States
Criminal Code, 18 U.S.C. 1464, on a twenty-four hour per day
basis in accordance with Pub. L. No. 100-459.” This rule was
subsequently invalidated by the United States Court of Appeals
for the D.C. Circuit, which rejected a 24-hour ban on indecency
and mandated a safe-harbor time period during which 18 U.S.C.
§ 1464 would not be enforced. See ACT 

, 932 F.2d at
1508. The FCC then amended the rule to include a safe-harbor


                               81
period, but subsequent review by the D.C. Circuit sitting en banc
found the FCC’s safe-harbor time period too limited. The court
instructed the FCC to “limit its ban on broadcasting of indecent
programs to the period from 6:00 a.m. to 10:00 p.m.” ACT I

, 58 F.3d at 670. In response, the FCC amended 47 C.F.R.
§ 73.3999 to its current form. In re Prohibitions Against Broad.
Indecency in 18 U.S.C. § 1464, 10 F.C.C.R. 10558 (1995).

       Accordingly, the Commission’s proffered interpretation
of 47 C.F.R. § 73.3999, which appears to contradict the plain
language of the regulation as well as the history of its adoption,
would appear to be erroneous and inconsistent with the
regulation.31 Because Rule 73.3999 only indicates the time of


     31
       The FCC’s “interpretation of its own regulation is, of
course, entitled to considerable deference.” Barnes v. Cohen,

, 1018 (3d Cir. 1984). But “our deference to an
agency’s interpretation of its own regulations is ‘tempered by
our duty to independently insure that the agency’s interpretation
comports with the language it has adopted.’” Conn. Gen. Life
Ins. Co. v. Comm’r of Internal Revenue, 

, 144 (3d
Cir. 1999) (quoting Dir., Office of Workers’ Comp. Programs,
U.S. Dep’t of Labor v. Gardner, 

, 70 (3d Cir. 1989)).
Accordingly, “we need not accept the agency interpretation if it
is ‘plainly erroneous or inconsistent with the regulation.’”

(quoting Bowles v. Seminole Rock &
Sand Co., 

, 414 (1945)); see also Conn. Gen. Life
Ins. 

(“We ‘must defer to the [agency’s]

                               82
day during which 18 U.S.C. § 1464 will be enforced, the FCC
should establish a violation of 18 U.S.C. § 1464 in order to
show a violation of Rule 73.3999. And because the indecency
provision of 18 U.S.C. § 1464 should be interpreted as
containing a scienter element, so too should the indecency
provision of 47 C.F.R. § 73.3999.

        Moreover, the FCC cannot do by administrative rule that
which Congress is constitutionally prohibited from doing by
statute. Whether or not the indecency provision of 47 C.F.R. §
73.3999 functions independently of 18 U.S.C. § 1464, the
FCC’s rule risks chilling constitutionally protected speech in the
same manner as the statutory provision. As a constitutional rule,
Smith is no less relevant merely because the government acts
through an executive agency in restricting the content of speech.
Any government regulation penalizing the content of speech or
expression should require proof of scienter as an element of
liability to survive First Amendment scrutiny.

      Scienter is an element in determining whether a violation
of 18 U.S.C. § 1464 or 47 C.F.R. § 73.3999 occurred. A
broadcast licensee should not be found liable for violating the


interpretation unless an “alternative reading is compelled by the
regulation’s plain language or by other indications of the
[agency’s] intent at the time of the regulation’s promulgation.”’”
(quoting Thomas Jefferson Univ. v. Shalala, 

, 512
(1994) (quoting Gardebring v. Jenkins, 

, 430
(1988))) (additional citation omitted) (alterations in original).

                               83
indecency provisions of 18 U.S.C. § 1464 or 47 C.F.R. §
73.3999 without proof the licensee acted with scienter. Because
the Commission’s proffered “non-delegable duty” theory of
CBS’s vicarious liability, which functionally equates to strict
liability for speech or expression of independent contractors,
appears to dispense with this constitutional requirement, it
should not be sustained.

                              C.

        As an alternative to vicarious liability, the FCC found
CBS directly liable for a forfeiture penalty under 47 U.S.C. §
503(b)(1)(B) for failing to take adequate precautionary measures
to prevent potential indecency during the Halftime Show.
Reconsideration Order at ¶ 17. According to the Commission,
CBS deliberately ignored warnings that visual indecency might
occur during the Halftime Show. The FCC contends the risk of
indecency was obvious following public comments of Jackson’s
choreographer, who predicted that Jackson’s performance would
include “some shocking moments,” and concerns raised by the
NFL over the Halftime Show script. The FCC asserts that CBS
failed to investigate these warnings or properly act to address
the risk.

      This failure, the FCC contends, satisfies the willfulness
element of 47 U.S.C. § 503(b)(1)(B). Under 47 U.S.C. §
503(b)(1)(B), the FCC has authority to order forfeiture penalties
upon determining that a person:



                               84
       willfully or repeatedly failed to comply with any
       of the provisions of this chapter or of any rule,
       regulation, or order issued by the Commission
       under this chapter or under any treaty, convention,
       or other agreement to which the United States is
       a party and which is binding upon the United
       States.

defined elsewhere in the Communications Act
as the “conscious and deliberate commission or omission of [an]
act, irrespective of any intent to violate any provision of this
chapter or any rule or regulation of the Commission authorized
by this chapter or by a treaty ratified by the United States.” 47
U.S.C. § 312(f)(1). Applying this standard, the FCC asserts its
“finding of willfulness is based on CBS’s knowledge of the
risks and its conscious and deliberate omissions of the acts
necessary to address them.” Reconsideration Order at ¶ 23.

                               1.

        As an initial matter, we note the record before us is
unclear on whether the agency properly applied the forfeiture
statute. As described, the Commission issued its forfeiture order
under 47 U.S.C. § 503(b)(1)(B), which includes an express
willfulness standard. But section 503(b)(1)(B) may not be the
applicable statutory provision for forfeitures based on broadcast
indecency. A separate provision of the forfeiture statute – 47
U.S.C. § 503(b)(1)(D) – authorizes the Commission to issue a
forfeiture penalty against any person the Commission


                               85
determines “violated any provision of section . . . 1464 of Title
18.” Accordingly, the forfeiture statute on its face appears to
require the Commission to sanction broadcast indecency through
section 503(b)(1)(D) rather than through section 503(b)(1)(B).32
Cf. Action for Children’s Television v. FCC, 

(D.C.
Cir. 1995) (citing 47 U.S.C. § 503(b)(1)(D) as the relevant
provision authorizing the FCC to impose a civil forfeiture for a
violation of the indecency provision of 18 U.S.C. § 1464).

       CBS and supporting amici contend the very fact of
section 503(b)(1)(D) excludes the possibility of the FCC
sanctioning violations of 18 U.S.C. § 1464 through section
503(b)(1)(B), because doing so would render section
503(b)(1)(D) superfluous. While this contention is perhaps
meritorious, we recognize the Commission’s interpretation of
the Communications Act, including the relevant forfeiture
provisions of 47 U.S.C. § 503(b)(1), would be entitled to
considerable deference. But we cannot resolve this dispute


    32
      If violations of 18 U.S.C. § 1464 may not be penalized
under section 503(b)(1)(B), it is uncertain whether violations of
47 C.F.R. § 73.3999 may be penalized under that section. As

, 47 C.F.R. § 73.3999 does no more than
establish the time of day during which 18 U.S.C. § 1464 will be
enforced. If Congress intended for violations of 18 U.S.C. §
1464 to be penalized under section 503(b)(1)(D), then it may
have intended for “violations” of 47 C.F.R. § 73.3999 also to be
penalized under that section.

                               86
among the parties, because, as we will explain, the
Commission’s interpretation of the statutory scheme is unclear.

       The FCC’s initial Forfeiture Order and subsequent
Reconsideration Order create some confusion. In both, the
Commission frequently refers to 47 U.S.C. § 503(b) generally
without specifying whether it is acting under subpart (1)(B) or
subpart (1)(D). See, e.g., Forfeiture Order at ¶ 1 n.1 (citing
section 503(b) without specification of relevant subpart); 

15 (referring to CBS’s forfeiture under “section 503(b)(1) of
the Act”); Reconsideration Order at ¶ 5 (“The Forfeiture Order
also rejected CBS’s claim that the violation was accidental
rather than willful under section 503(b)(1) of the Act.”).
Moreover, the Commission repeatedly describes its orders as
determinations that CBS violated the indecency provisions of
both 18 U.S.C. § 1464 and 47 C.F.R. § 73.3999. E.g.,
Forfeiture Order at ¶¶ 1, 7, 36; Reconsideration Order at ¶ 1 &
n.3. Yet the Commission appears to be penalizing these
violations only under section 503(b)(1)(B), and not under
section 503(b)(1)(D):

       Under      s e c tion 503(b)(1)(B )     of   th e
       [Communications] Act, any person who is
       determined by the Commission to have willfully
       failed to comply with any provision of the Act or
       any rule, regulation, or order issued by the
       Commission shall be liable to the United States
       for a monetary forfeiture penalty. . . . For the
       reasons set forth above, we conclude under this

                               87
       standard that CBS is liable for a forfeiture for its
       willful violation of 18 U.S.C. § 1464 and section
       73.3999 of the Commission’s rules.

Forfeiture Order at ¶ 36 (footnote omitted); see also 

30
n.103 (“As we find CBS legally responsible for the indecent
broadcast based on both its own willful omission and its
vicarious liability for the willful acts of its agents under the
principle of respondeat superior, we need not address whether
it could also be held responsible under Section 503(b)(1)(D)
without a showing of willfulness.”).

       On this record, the FCC’s orders may be read as
penalizing a violation of 18 U.S.C. § 1464 under section
503(b)(1)(B). Or, the FCC’s orders may be understood as
penalizing CBS’s violation of the indecency provision of 47
C.F.R. § 73.3999 under section 503(b)(1)(B) but not penalizing
CBS’s violation of the indecency provision of 18 U.S.C. § 1464.
Under the latter reading, the FCC’s assertions that CBS violated
18 U.S.C. § 1464 would be included in the orders only for the
purpose of establishing CBS’s violation of Rule 73.3999, which
enforces 18 U.S.C. § 1464.

         Again, it is unclear whether the statutory scheme permits
violations of 18 U.S.C. § 1464 to be penalized by forfeitures
issued under section 503(b)(1)(B) instead of, or in addition to,
section 503(b)(1)(D). And, if section 503(b)(1)(D) is implicated
here, it is unclear whether the willfulness standard applies under



                               88
that section. Unlike section 503(b)(1)(B), the language of
section 503(b)(1)(D) does not include the term “willful.”

       Accordingly, further clarification from the FCC is
necessary before it may be determined whether the agency
correctly concluded that CBS’s actions constituted a “willful”
violation of the indecency provisions.

                                 2.

        The record is also unclear whether the Commission
correctly determined that CBS’s conduct satisfied the
willfulness standard. Specifically, it is unclear whether the
Commission’s determination accounts for the apparent interplay
between the statutory “willfulness” standard of the forfeiture
statute and the constitutionally required scienter element of the
indecency provisions. If the FCC based its forfeiture order in
whole or in part on 47 U.S.C. § 503(b)(1)(D), and if it
interpreted that section as not incorporating the willfulness
standard of section 503(b)(1)(B), then the scienter element of 18
U.S.C. § 1464 would appear to set the bar for establishing that
CBS acted with the requisite mental state.33 But even if the


     33
       The FCC has not yet addressed this possibility. See
Forfeiture Order at ¶ 29 n.103 (“As we find CBS legally
responsible for the indecent broadcast based on both its own
willful omission and its vicarious liability for the willful acts of
its agents under the principle of respondeat superior, we need
not address whether it could also be held responsible under

                                89
willfulness standard is incorporated into section 503(b)(1)(D) –
or if a forfeiture for broadcast indecency may issue entirely
under section 503(b)(1)(B) – a showing of scienter is
constitutionally required to penalize broadcast indecency.
Accordingly, the willfulness standard, both as interpreted and as
applied by the FCC, should set a bar at least as high as scienter.
And on this record, it is not clear whether the FCC has complied
with this requirement.

        Forfeiture liability under 47 U.S.C. § 503(b)(1)(B) is
triggered by a broadcast licensee’s violation of a distinct “rule,
regulation, or order of the Commission.” This appears to call
for a two-part inquiry: did a violation occur; and was that
violation “willful” or “repeated” for the purposes of section
503(b)(1)(B).34 Here, the triggering violations – that is, the
violations that satisfy the first part – are CBS’s alleged
violations of the indecency provisions of 18 U.S.C. § 1464 and
47 C.F.R. § 73.3999. Accordingly, it seems the Commission’s
first step should be to determine whether CBS’s conduct
violated the indecency provisions, including establishing
scienter.



Section 503(b)(1)(D) without a showing of willfulness.”).
   34
     If 47 U.S.C. § 503(b)(1)(D) is interpreted as incorporating
the willfulness standard, its operation appears identical.
Forfeiture liability under that section is triggered by a broadcast
licensee’s violation of 18 U.S.C. § 1464.

                                90
       The scienter element of the indecency provisions – as a
constitutional requirement – is paramount. That is, scienter is
the constitutional minimum showing for penalizing the speech
or expression of broadcasters – irrespective of whether the
penalty is in the form of a monetary forfeiture under 47 U.S.C.
§ 503(b)(1) or a different punitive measure available to the FCC.
But the record is unclear whether the Commission’s
interpretation and application of the willfulness standard
account for this apparent interplay with the scienter element of
the indecency provisions. Accordingly, we are unable to decide
whether the Commission’s determination that CBS acted
“willfully” was proper in light of this scienter requirement.

        Determining whether CBS acted with the requisite
scienter would call for an examination of the scienter element
inherent in the indecency provisions. Where a scienter element
is read into statutory text, scienter would not necessarily equate
to a requirement of actual knowledge or specific intent. See
Carter v. United States, 

, 269 (2000) (citing Staples
v. United States, 

(1994)). “The presumption in
favor of scienter requires a court to read into a statute only that
mens rea which is necessary to separate wrongful conduct from
otherwise innocent conduct.” 

States v. X-
Citement Video, Inc., 

, 72 (1994)). In some
circumstances, recklessness is considered a sufficiently culpable
mental state for the purposes of imposing liability for an act.
E.g., Ernst & Ernst v. Hochfelder, 

, 194 (1976) (“In
certain areas of the law recklessness is considered to be a form


                                91
of intentional conduct for purposes of imposing liability for
some act.”).

         Recklessness would appear to suffice as the appropriate
scienter threshold for the broadcast indecency regime. It is
likely that a recklessness standard would effectively “separate
wrongful conduct from otherwise innocent conduct” of
broadcasters, 

, without creating an end-
around indecency restrictions that might be encouraged by an
actual knowledge or intent standard. And a broadcast licensee’s
reckless disregard for the content of its programming would be
likely to unreasonably create a known or obvious risk of
indecent material being aired, making it highly probable that
harm will follow. See Safeco Ins. Co. of Am. v. Burr, - - U.S. -
-, 

, 2215 (2007) (“While ‘the term recklessness
is not self-defining,’ the common law has generally understood
it in the sphere of civil liability as conduct violating an objective
standard: action entailing ‘an unjustifiably high risk of harm that
is either known or so obvious that it should be known.’”
(quoting Farmer v. Brennan, 

, 836 (1994); citing
Prosser and Keeton, Handbook of the Law of Torts § 34 at 213-
14)).

        Also instructive here are other cases determining
recklessness to be an adequate level of scienter for imposing
liability in related First Amendment contexts where speech or
expression is restricted based on its content. In Osborne v.
Ohio, 

(1990), the Supreme Court addressed a
criminal defendant’s constitutional challenges to Ohio’s

                                 92
prohibition against possessing and viewing child pornography.
The petitioner in Osborne contended in part that the statute was
unconstitutional because it did not expressly include a scienter
element. See 

n.9. But the Court rejected this
argument, noting that “Ohio law provides that recklessness is
the appropriate mens rea where a statute ‘neither specifies
culpability nor plainly indicates a purpose to impose strict
liability.’” 

Rev. Code Ann. § 2901.21(B)
(1987)). The Court went on to explain:

       The Ohio Supreme Court also concluded that the
       State had to establish scienter in order to prove a
       violation of [the child pornography statute] based
       on the Ohio default statute specifying that
       recklessness applies when another statutory
       provision lacks an intent requirement. The [child
       pornography] statute on its face lacks a mens rea
       requirement, but that omission brings into play
       and is cured by another law that plainly satisfies
       the requirement laid down in Ferber that
       prohibitions on child pornography include some
       element of scienter.

(citations omitted).

       But recklessness should be the constitutional minimum.
A broadcast licensee’s mere negligence in airing indecent
material during a restricted time slot would not satisfy the
scienter element of 18 U.S.C. § 1464 or 47 U.S.C. § 73.3999.


                                  93
In Manual Enterprises, the Supreme Court read a scienter
element into a federal statute prohibiting the advertisement of
obscene material through the 

. The
Court addressed the scope of this inferred scienter element,
stating “it may safely be said that a federal statute which, as we
construe it, required the presence of that [scienter] element is
not satisfied . . . merely by showing that a [magazine publisher]
defendant did not make a good faith effort to ascertain the
character of his advertiser’s materials.” 

In the
broadcast indecency context, a broadcaster might act recklessly
if it fails to exercise proper control over the unscripted content
of its programming. But when a broadcaster endeavors to
exercise proper control, but ultimately fails, to prevent
unscripted indecency, it will not have acted with scienter if its
actions were negligent rather than reckless.

       The airing of scripted indecency or indecent material in
pre-recorded programming would likely show recklessness, or
may even constitute evidence of actual knowledge or intent. But
when unscripted indecent material occurs during a live or
spontaneous broadcast, as it did here, the FCC should show that
the broadcaster was, at minimum, reckless in causing the
indecent material to be transmitted over public airwaves.35 A


  35
     The facts of Young Broadcasting, as alleged by the FCC in
its Notice of Apparent Liability in that case, may be indicative
of recklessness. There, the broadcast licensee presented
inherently risky programming, a segment titled “Puppetry of the

                               94
broadcaster’s failure to use available preventative technology,
such as a delay mechanism, when airing live programming may,
depending on the circumstances, constitute recklessness.

        Here, CBS contends it took adequate measures to guard
against the risk of unscripted indecency in the Halftime Show.
It points to numerous script reviews and revisions on record,
several wardrobe checks, and the implementation of a standard-
industry-practice audio delay. CBS also notes that it engaged in
extensive internal discussions and dialogue with the NFL over
concerns relating to potential performers and content of the
Halftime Show. CBS rejected other potentially-controversial
performers who had previously engaged in offensive on-air
conduct in favor of Jackson and Timberlake, with the NFL
ultimately approving the selections. Timberlake in particular,
CBS asserts, had on several prior occasions performed “Rock
Your Body” live on national television without incident. CBS
also rejects the FCC’s contention that Jackson’s choreographer’s



Penis,” and invited performers on camera who it knew were
nude below their overcoats and who it knew employed nudity as
a central part of their act. Indeed, the performers were a source
of interest for the program precisely because their act involved
nudity and the graphic display of sexual organs. Moreover, the
broadcast licensee’s off-camera employees urged the performers
to demonstrate their act – which involved manipulating their
genitalia to form various objects – while the cameras were
broadcasting live.

                               95
“shocking moments” prediction should have elicited concern
about the potential for unscripted nudity, explaining that the
statement was reasonably considered commonplace
entertainment industry hyperbole and a veiled reference to
Timberlake’s surprise guest appearance. Moreover, CBS notes
“it is undisputed that, after the [choreographer’s “shocking
moments”] quote appeared, CBS reviewed the script, issued
wardrobe instructions, checked Jackson’s costume, and
implemented a delay to ensure adherence to CBS standards.”
CBS Reply Br. at 23 (emphasis omitted).

        The Commission disputes the adequacy of these efforts
by CBS. And the parties also dispute the availability – or lack
thereof – of video delay technology at the time of the Halftime
Show.36 The FCC contends CBS should have instituted a video
delay mechanism to guard against a potential act of indecency.
See, e.g., Reconsideration Order at ¶ 22 n.71 (“Notwithstanding
CBS’s protestations to the contrary, delaying a live broadcast
long enough to block visual indecency does not appear to pose
major technical challenges to a company such as CBS.”). But
according to CBS, “no such technology had ever been
developed, or was thought necessary, before the unprecedented
halftime incident.” CBS Reply Br. at 23. Instead, CBS states its
implementation of a five-second audio delay was both “state of
the art” and standard industry practice at the time of the


   36
      This issue appears central to a recklessness inquiry on the
facts here.

                               96
Halftime Show. See, e.g., Reconsideration Order at ¶ 22
(“[CBS] asserts that [its use of audio but not video delay] did
not reflect a ‘calculated risk’ but rather simply conformance
with standard industry practice, and that a video delay was
‘entirely unprecedented, and the technique had to be specifically
engineered after the Super Bowl incident.’”).

       The Commission has not refuted CBS’s assertions.
Instead, it points only to CBS’s use of video delay for an awards
show in the weeks following the Halftime Show. But the state
of the art even shortly after the Halftime Show does not
necessarily refute CBS’s contention that video delay technology
was newly created for the awards show as a reaction to the
Halftime Show incident but otherwise unavailable prior to that
time. The record at present is scant on evidence regarding the
availability, history and other details of video delay technology.
And the Commission cannot prevail if the issue of CBS’s
scienter is to be resolved only on assertions of the parties that
are unsupported by evidence on record.               Because the
Commission carries the burden of showing scienter, it should
have presented evidence to demonstrate, at a minimum, that
CBS acted recklessly and not merely negligently when it failed
to implement a video delay mechanism for the Halftime Show
broadcast.




                               97
       Accordingly, we are unable to decide whether the
Commission’s determination that CBS acted “willfully” was
proper in light of the scienter requirement.37

                              V.

        In finding CBS liable for a forfeiture penalty, the FCC
arbitrarily and capriciously departed from its prior policy
excepting fleeting broadcast material from the scope of
actionable indecency. Moreover, the FCC cannot impose
liability on CBS for the acts of Janet Jackson and Justin
Timberlake, independent contractors hired for the limited
purposes of the Halftime Show, under a proper application of
vicarious liability and in light of the First Amendment
requirement that the content of speech or expression not be

     37
       As discussed, it is unclear whether the Commission
interprets the willfulness standard, which requires a “conscious
and deliberate” act or omission, as setting a lower or higher bar
than scienter. We note there appears to be tension between the
common understanding of the terms “conscious and deliberate”
– which typically indicate a higher standard than recklessness –
and the Commission’s interpretation of those terms in its
application of the willfulness standard of 47 § U.S.C.
503(b)(1)(B) to CBS. But because further clarification is
needed on the FCC’s interpretation of the text and mechanics of
the forfeiture statute, we do not decide whether the
Commission’s interpretation of these terms, or its application of
the willfulness standard, is permissible.

                               98
penalized absent a showing of scienter. And the FCC’s
interpretation and application of 47 U.S.C. § 503(b)(1) are not
sufficiently clear to permit review of the agency’s determination
of CBS’s direct liability for a forfeiture penalty based on
broadcast indecency.

        Further action by the Commission would be declaratory
in nature, as the agency may not retroactively penalize CBS.
Even so, our holding will not foreclose all of the Commission’s
adjudicatory options. In Golden Globes, for instance, the
Commission set forth a new policy and proceeded with its
indecency determination even though a retroactive monetary
forfeiture was unavailable. See 

15 (concluding that
“[b]ut for the fact that existing precedent would have permitted
this broadcast, it would be appropriate to initiate a forfeiture
proceeding . . .”); see also 33 Wright & Koch, Federal Practice
and Procedure: Judicial Review § 8313(c) (2007) (suggesting
that, in order to “avoid arrogating authority” for policymaking
that is assigned to the agency, remand is appropriate when an
agency has issued an arbitrary decision). Accordingly, we will
vacate the orders of the FCC and remand for further proceedings
consistent with this opinion.




                               99
CBS Corp. v. FCC, 06-3575 (9/11/07)



RENDELL, Circuit Judge, concurring in part, dissenting in part.

       I wholeheartedly agree with the majority’s cogent
reasoning and conclusion that the FCC’s imposition of a fine
against CBS cannot stand, because it acted arbitrarily and
capriciously in doing so.

        However, I disagree with our opining, in dicta, regarding
the various possible levels of scienter arguably required under
§ 503(b)(1)(B) or (D), or 18 U.S.C. § 1464, or the Constitution.
 For one thing, this is dicta. For another, the FCC has conceded
that the level of scienter required in order to warrant a fine is
“willful,” and has itself urged that the definition of “willful” is
as set forth in 47 U.S.C. § 312(f)(i), meaning “conscious and
deliberate commission or omission of such act.” Appellee’s
Br. 34-38.

        Were it necessary to venture more deeply into the issue
of scienter, which I submit it is not, we should point out that the
real dispute between the parties is as to what must have been
“willful.” The FCC adopted the position that the conscious and
deliberate act was simply the act of broadcasting,38 while the

  38
    The majority points out that the FCC only “abandoned” this
position – or, really, side-stepped it – in the Reconsideration

                               100
opposing (and, I believe, better) view is that the requisite
conscious and deliberate act is the act of broadcasting the
indecent material at issue.39 Clearly, CBS’s conduct here fails
the latter test.

        I also take issue with the majority’s conclusion that there
is a need to remand this case. We have held that the instant fine
was improperly imposed. There are no further proceedings
necessary.40 Should the FCC wish to explain its change in
policy, it can do so in the next case or issue a declaratory ruling.
See 47 C.F.R. § 1.2.41 It serves no purpose to do so in the


Order, where it sought to impose the prevention of this type of
broadcast as a non-delegable duty. See Reconsideration
Order at ¶ 23.
       39
     Or, if an omission, as the FCC alternatively argues, the
conscious and deliberate failure to prevent the broadcast of
indecent material.
  40
     Because we have held that the FCC changed its policy, and
because the broadcast at issue predated this change, the FCC
cannot, consistent with its policy, re-impose the fine after
providing an explanation. See Golden Globes, 18 F.C.C. 19859,
at ¶ 15 & n.40.
       41
      The majority cites Golden Globes as authority for the
agency’s setting forth a new policy on remand, but that case did
not involve a remand. Moreover, the passage from the treatise

                               101
context of this litigation. Nothing is to be gained, and CBS
should not be forced to be a party to any such remand, with its
attendant time and expense. Accordingly, I respectfully disagree
with the disposition of this appeal and would reverse the order
imposing forfeiture, without remanding the case.




cited by the majority, 33 Wright & Koch, Federal Practice and
Procedure: Judicial Review § 8313(c) (2007), concerns the
proper disposition of a case where further proceedings are
necessary for the agency to consider the matter anew and reach
a well-reasoned ultimate decision. That is not the case here
where the arbitrariness of the agency’s decision is conclusive as
to the outcome of the case.

                              102