AT&T Retrans Court Loss Could Affect Good-Faith Appeal

A court dismissed AT&T's breach of contract and a trade secrets violation complaint against a negotiator handling retransmission consent talks for a group of Sinclair sidecar stations. That prompted speculation by industry lawyers we spoke with Friday on whether the decision will affect broadcasters' appeal of an FCC ruling that they violated good faith rules.

MVPD and broadcast attorneys disagreed whether those stations’ appeal at the FCC could be buoyed by the court ruling. In a docket 19-cv-01925 order Thursday (in Pacer), U.S. Magistrate Judge Noelle Collins of St. Louis granted consultant Max Retrans's motion to dismiss the case with prejudice. The sidecars separately are appealing to the FCC a Media Bureau finding they violated per se good-faith negotiating standards in talks with AT&T (see 1912100057).

Collins said Max Retrans' disclosure of confidential information to the nine Sinclair-operated station groups for which it was negotiating retrans agreements wasn't inconsistent with the nondisclosure agreement the consultant signed. AT&T said Friday it's reviewing the ruling. The Media Bureau and Sinclair didn’t comment.

Cable lawyer Scott Friedman of Cinnamon Mueller told us the NDA issues contested in the litigation don't have big overlap with the good-faith negotiation issues at the heart of the FCC proceeding. The decision isn't likely to play much if any role in FCC consideration of the broadcaster appeal, he said. Echoed telecom lawyer Shannon Heim of Moss and Barnett, the underlying proof is different in court vs. an administrative agency, and the issue under consideration -- an NDA vs. good faith -- is also distinct. She said the FCC as the expert agency will apply its own precedent to the facts.

Since the dismissal was with prejudice, it could add weight to the stations’ application for review, said broadcast attorneys unaffiliated with the case. Perkins Coie attorney Marc Martin, who represented Max Retrans in the lawsuit and the broadcasters appealing the Media Bureau decision, agreed. The dismissal “substantially undermines the complaint originally filed,” Martin told us. The bureau said Max Retrans was refusing to negotiate on behalf of the broadcasters, but the magistrate judge’s decision said the negotiator was making offers for all of its clients, Martin said.

“This certainly doesn’t help the parties opposed to the application for review,” said broadcast lawyer Anthony Lepore. The dismissal order could be “persuasive evidence” for the broadcasters seeking appeal, he said. If the FCC rejects the application for review, the federal order would also carry weight if that decision is appealed to the courts, broadcast lawyers said. The FCC hasn’t acted on the application for review, Martin said.

The staff finding for AT&T was the first time broadcasters have been found in violation of the good-faith negotiation rules, TV station lawyers said. Many broadcasters would like to see that decision reversed, they said. Some attorneys saw AT&T’s complaint as related to then-ongoing negotiations over the since-renewed Satellite Television Extension and Localism Act.