FCC 91-428 Federal Communications Commission Record 7 FCC Red No. 2 pounded by misrepresentation and lack of candor; thus, Before the he found that Garden State was unqualified to be a Com­ Federal Communications Commission mission licensee. Washington, D.C. 20554 2. For the reasons which follow, we find that Garden State abused the Commission's processes by filing its ap­ plication for the primary purpose of achieving a settle­ ment. We also find that Garden State lacked candor in MM Docket No. 88-382 connection with this proceeding. Accordingly, we will deny Garden State's application for a construction permit In re Applications of without conducting further proceedings. Additionally, we find no merit to Garden State's allegations that issues WWOR-TV, INC. File No. BRCT-871221KE should be added against WWOR. We will therefore grant renewal of WWOR's license to operate station WWOR­ For Renewal of License of TV. Station WWOR(TV), Secaucus. New Jersey II. BACKGROUND 3. To understand the issues here, it is useful to set forth and the somewhat complex procedural history leading up to the matters now before us. That history involves not only GARDEN STATE File No. BPCT-871223KG Garden State, but also an entity sharing some common BROADCASTING LIMITED principals with Garden State, Mainstream Television PARTNERSHIP Limited Partnership (Mainstream). As will be seen, both the Mainstream and Garden State litigation culminated in settlements, a factor that contributed to the issues before For a Construction Permit us. Secaucus, New Jersey 4. Mainstream litigation. Channel 9 was formerly a New York City station licensed to RKO General, Inc. (RKO). The Commission designated channel 9 for hearing on APPEARANCES questions concerning RKO's basic and comparative quali­ fications. The Commission terminated that proceeding on Michael R. Gardner, Charles R. Milkis, and David B. March 29, 1983, after RKO, pursuant to an act of Con­ Jeppsen on behalf of WWOR-TV, Inc.; John K. Cooper gress, requested that channel 9 be reallocated to Secaucus. (Pfalz & Woller) and Roy W. Boyce (Cohen and Berfield, RKO General. Inc. (WOR-TV), 53 RR 2d 671 (1983), aff'd P.C.) on behalf of Garden State Broadcasting Limited sub nom. Multi-State Communications, Inc. v. FCC, 728 Partnership; Charles E. Dziedzic. Y. Pauleue Laden, and F.2d 1519 (1984), cert. denied, 469 U.S. 1017 (1984). Gary P. Schonman on behalf of Chief, Mass Media Bu­ Subsequently. on June 4, 1986, RKO requested permis­ reau. sion to assign channel 9 to a subsidiary of MCA. Inc. (MCA), until recently the parent corporation of WWOR. 5. Shortly before that, on March 31. 1986, Mainstream DECISION filed a petition seeking to have RKO's license for channel 9 set for early renewal and filed a mutually exclusive Adopted: December 27, 1991; Released: January 22, 1992 application for a construction permit. (RKO's license would otherwise have expired on March 12, 1988. See By the Commission: Channel 9 Reallocation (WOR-TV), 53 RR 2d 469, 472a ~ 15 (1983).) After RKO and MCA filed their assignment application, Mainstream filed a petition to deny the as­ I. INTRODUCTION signment. 1. In this proceeding, WWOR-TV, Inc. (WWOR) seeks 6. Mainstream consisted of one general partner, Jean renewal of its license to operate station WWOR-TV, chan­ Wells (equity interest 3.75 percent), and several limited nel 9, in Secaucus, New Jersey. Garden State Broadcasting partners. See WWOR-TV, Inc., 6 FCC Red 131, 132-33 ~~ Limited Partnership (Garden State) has filed a mutually 10-19, 134 ~ 29 (I.D. 1991). One of the limited parters, exclusive application for a construction permit for a new Richard Rynd, in conjunction with Mainstream's counsel, facility on channel 9. Now before the Commission is an Lewis I. Cohen, was instrumental in organizing Main­ initial decision on remand by Administrative Law Judge stream. Rynd's cousin, the late Sidney Fetner,1 was one of Richard L. Sippel denying a proposal by the parties to Mainstream's limited partners. (As will be seen, Wells, settle this proceeding. WWOR-TV, Inc .. 6 FCC Red 4350 Fetner, and Cohen are also associated with Garden State.) (I.D. 1991). Under the terms of the settlement, Garden 7. The Commission, on December 9, 1986, rejected State would dismiss its application in return for payment Mainstream ·s allegations, dismissed Mainstream's applica­ of $2 million. The ALJ found that, contrary to 47 U.S.C. tion, and approved the assignment of channel 9 from § 31l(d)(3)(B), Garden State's application was filed for RKO to MCA's subsidiary. RKO General. Inc., 1 FCC Red the purpose of reaching a settlement agreement. The ALJ 1081 (1986). Mainstream thereupon appealed the Com­ also found that in so doing Garden State committed an mission's action to the United States Court of Appeals for abuse of the Commission's processes, which was com- the District of Columbia Circuit. 6 FCC Red at 134 ~~ 25-29. Mainstream's appeal was terminated by a settle­ ment agreement in which RKO paid Mainstream $5.37 636 7 FCC Red No. 2 Federal Communications Commission Record FCC 91-428 million on April 1. 1987. Of that amount, Wells received 12. Cohen, Wells, Fetner, and Fetner's wife met for $178,694, Fetner received $1.3 million, and Cohen's law dinner in New York. 6 FCC Red at 135 ~~ 33-35. The firm was paid $528,500. MCA commenced operation on ALJ found that the evidence did not establish the date of channel 9 on April 3, 1987. Id. at 134 ~ 30. this meeting. At the dinner meeting, Fetner offered Wells 8. Garden State litigation. On December 21, 1987, an interest in a limited partnership to be formed to WWOR, then a subsidiary of MCA, filed the renewal challenge channel 9's renewal, and within a few days application now before us. Two days later, Garden State Wells accepted Fetner's offer. filed its application for a construction permit. As was 13. The principals then formed Garden State, prepared Mainstream, Garden State is a limited partnership with a budget, made financial arrangements, and filed an ap­ Wells as the sole general partner (equity interest 4 plication. 6 FCC Red at 135-36 ~~ 36, 40-43. As part of percent). 6 FCC Red at 134-35 ~~ 31-36. Fetner was one this effort, Garden State paid a consultant approximately of several limited partners, and Cohen served as Garden $19,000 to prepare an analysis of channel 9's program­ State's counsel. ming. Garden State's total expenditures for expert and 9. On August 31. 1988, WWOR challenged the propri­ technical assistance were around $30,000. ety of Garden State's application in a motion to enlarge 14. The ALJ also made findings concerning the negotia­ issues. WWOR contended that Garden State's application tions leading to the settlement agreement. 6 FCC Red at was filed for the improper purpose of achieving a settle­ 136 ~~ 44-47. While proceedings were going on before the ment. contrary to the provisions of 47 U.S.C. § 311(d)(3). FCC, MCA (then WWOR's parent corporation) was also (The Commission may not approve a settlement filed for suing Garden State in federal district court for allegedly the purpose of reaching or carrying out a settlement violating the Mainstream settlement, which MCA con­ agreement.) The ALJ granted WWOR's motion and speci­ tended barred Garden State's challenge. Id. at 140 n.9. fied an issue. WWOR-TV, Inc., FCC 88M-3567 (Oct. 25, After the judge in that court action asked for a status 1988).2 Nonetheless, on September 27, 1990. the parties report on settlement, WWOR's counsel arranged to meet submitted a settlement agreement. (As will be seen. with Cohen to discuss settlement. See tr. 1096, 1446, 1571. WWOR terminated the settlement on September 3. 1991, Three meetings occurred between January 1990 and May thereby rendering moot the parties' joint request for ap­ 1990, but no settlement resulted. In mid-September MCA proval of the settlement.) was engaged in negotiations with an international cor­ 10. In a partial initial decision. the ALJ concluded that poration, which sought to acquire MCA. See paragraph Garden State had not abused the Commission's processes 64, below. These negotiations heightened MCA's interest by acting contrary to 47 U.S.C. § 311 in filing its applica­ in settling with Garden State. Garden State ultimately tion, and approved the settlement agreement. WWOR-TV, accepted an MCA offer of $2 million. Inc., 6 FCC Red 131 (I.D. 1991). The Commission, how­ 15. The ALJ concluded that the record failed to dem­ ever, reviewed the partial initial decision on its own mo­ onstrate that Garden State filed its application with an tion and concluded that the existing record was intent to obtain a settlement. 6 FCC Red at 136-37 ~~ inadequate to resolve certain material questions of fact. 49-50. He observed, for example. that. although the re­ The Commission therefore remanded the case to the ALJ tainer agreement with Cohen's law firm provided for a for further deliberations. WWOR-TV, Inc .. 6 FCC Red bonus in the event of a settlement, it also provided for a 1524 ( 1991), recon. dismissed, 6 FCC Red 4879 ( 1991 ). bonus if Garden State were to win a license. The ALJ After remand, the ALJ found that Garden State had filed noted that Garden State had been vigorously prosecuting its application for the improper purpose of reaching a its application. Garden State had submitted evidence. filed settlement, denied the settlement, and denied Garden numerous pleadings, and expended approximately $30,000 State's application.