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RCA Global Communications Inc. v. United States

decided: July 27, 1977.

RCA GLOBAL COMMUNICATIONS, INC., PETITIONER,
v.
FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, RESPONDENTS, AND ITT WORLD COMMUNICATIONS INC., TRT TELECOMMUNICATIONS CORPORATION AND WESTERN UNION INTERNATIONAL, INC., INTERVENORS



Petition for review of Federal Communications Commission Report, Order and Notice of Proposed Rulemaking, amending a formula governing the distribution of international telegraph traffic, pursuant to Communications Act § 222(e), 47 U.S.C. § 222(e). The Order is vacated and the case is remanded to the Commission for further proceedings in accordance with this opinion.

Moore, Feinberg, Gurfein, Circuit Judges. Feinberg, C.j., concurring.

Author: Moore

MOORE, Circuit Judge:

Petitioner, RCA Global Communications, Inc. ("RCA") by its petition seeks to review and set aside, in part, a " REPORT AND ORDER AND NOTICE OF PROPOSED RULEMAKING" issued on January 7, 1976 by the Federal Communications Commission (the "Commission" or "FCC") which, in substance, purported to strike down a formula (sometimes referred to as the "international formula") which had been created in, and utilized since, 1943 when such a formula was deemed necessary to insure a fair distribution of unrouted international telegraph traffic and thus avoid possible monopoly power in the Western Union Telegraph Company ("WU") as a result of its merger with Postal Telegraph Cable Company ("Postal"). To make this merger possible, Congress added Section 222 to the Communications Act ("the Act"), 47 U.S.C. § 151 et seq.

Supplemental to the Order of January 7, 1976 is a Memorandum Opinion and Order issued on September 27, 1976 and based upon petitions (1) by RCA for a stay pending review of the January 7, 1976 Order by this court; (2) by Western Union International, Inc. ("WUI"); (3) by WU for an extension of time; and (4) by WU for clarification.

Two paragraphs of Section 222 are pertinent to the issues before us. Paragraph (e)(1) provides that Western Union

". . . distribute among the international telegraph carriers, telegraph traffic by wire or radio destined to points without the continental United States, and divide the charges for such traffic, in accordance with such just, reasonable, and equitable formula in the public interest as the interested carriers shall agree upon and the Commission shall approve . . . ."

Pursuant to this directive the international formula was evolved. Any modification of this formula was to be as provided in paragraph (e)(3):

"(3) Whenever, upon a complaint or upon its own initiative, and after a full hearing, the Commission finds that any such distribution of telegraph traffic among telegraph carriers, or any such division of charges for such traffic, which is being made or which is proposed to be made, is or will be unjust, unreasonable, or inequitable, or not in the public interest, the Commission shall by order prescribe the distribution of such telegraphic traffic, or the division of charges therefor, which will be just, reasonable, equitable, and in the public interest, and will be, so far as is consistent with the public interest, in accordance with the existing contractual rights of the carriers." (Emphasis added).

Congress thus specified a distribution formula with Commission approval as a pre-merger condition. Its purpose was to "prevent WU from favoring itself" in the routing of messages. The parties were to agree upon a formula, if possible. After an agreement had been reached it was submitted to the Commission for review. Upon review, the Commission modified the formula in certain respects. For this reason the Commission regarded the formula as "prescribed" by it rather than merely "approved". Joint Appendix ("JA") 4, n.5. This formula without major changes or modifications had remained in effect for some thirty-three years. The object of the formula was, "by freezing the carriers' pre-merger positions" and by setting up quotas, to create an equitable situation among the international record carriers ("IRCs"), namely, those companies carrying messages overseas in contrast to WU's domestic service.

WU is the only domestic carrier which receives messages from the public. The messages fall into two categories: (1) "routed" wherein the customer specifies a particular IRC which he wishes to transmit his message overseas; and (2) "unrouted" wherein the particular IRC is designated.

Congress, as part of the merger legislation, specifically provided with respect to "distribution of telegraph traffic among telegraph carriers or any division of charges therefor that if ", after a full hearing, the Commission finds that either of them

". . . is or will be unjust, unreasonable, or inequitable, or not in the public interest, the Commission shall by order prescribe the distribution of such telegraphic traffic, or the division of charges therefor, which will be just, reasonable, equitable and in the public interest . . . ." 47 U.S.C. § 222(e)(3)

Initiation of any such proceeding was to be "upon a complaint or upon its [the Commission's] own initiative."

This proceeding's ancient history is irrelevant except for the brief comment that by a complaint dated November 25, 1964 ITT World Communications, Inc. ("ITT") (also an IRC) sought a revision of the formula. Thereafter and through 1965 various IRCs submitted statements and comments thereto, including parties (intervenors) to this appeal, WUI (a company formed to handle overseas messages because of the requirement that WU divest itself of its cable operations) and TRT Telecommunications Corporation ("TRT").

For all practical purposes, the proceeding remained dormant until November 1973 when the Commission issued an order*fn1 instituting an investigation to determine whether the distribution of telegraph traffic handled by WU was within the statutory language of unjust, unreasonable, etc., and if so, what the Commission should do about it. In addition to ITT, RCA, WUI, TRT and WU, The French Telegraph Cable Co., Canadian National Railway Co., Canadian Pacific, Ltd., and United States-Liberia Radio Corporation were made parties respondent. A timetable was set up for the filing of statements of fact, memoranda of law, responses and replies.

This the respondents, RCA, ITT, WUI and TRT, did in great volume. (JA 169-672). There were statements of position, replies to each others' comments, supplemental comments and further replies thereto. Throughout RCA demanded an oral hearing to develop facts, albeit on many occasions RCA presented by memoranda and/or affidavits its views. The record before us discloses at least thirty-three separate statements arguing the parties' respective causes. Out of this impressive array of fact and argument came a final decision by the Commission released on January 7, 1976 supplemented by a decision released on September 27, 1976.

For present appellate review purposes this mass of material can be distilled down to the two points which RCA urges as entitling it to have the Commission's order of January 7, 1976 vacated and set aside and the case remanded to the Commission for appropriate further proceedings, namely, that " THE COMMISSION'S ' NOTICE-AND-COMMENT' PROCEDURE DID NOT AFFORD RCA [GLOBCOM] THE ' FULL HEARING' TO WHICH SECTION 222(e)(3) ENTITLED IT", and " THE COMMISSION'S PRESCRIPTION OF A NEW INTERIM FORMULA IS NOT SUPPORTED BY ADEQUATE FINDINGS". As a corollary, RCA claims that such findings as are purported to have been made are arbitrary, capricious and unsupported by substantial evidence.

A "full hearing" with its ultimate purpose of developing the facts dispositive of the issues before the adjudicating agency does not necessarily require that such facts be adduced by question and answer interrogation of witnesses giving oral testimony. Such procedure (in many situations possibly old-fashioned) often resulted in thousands of pages of transcript which when analyzed could have been condensed into a comparatively brief narrative. The fairness of the "hearing" depends not only upon the opportunity to answer the facts so adduced, but also to present the adversary's own factual version. The many statements and counter-statements, previously ...


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