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MALLENBAUM v. David Mallenbaum and Amy Mallenbaum, Appellants. (1996)

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United States Court of Appeals,Third Circuit.

Amy MALLENBAUM;  David Mallenbaum, individually and on behalf of all others similarly situated v. ADELPHIA COMMUNICATIONS CORPORATION, David Mallenbaum and Amy Mallenbaum, Appellants.

No. 95-1085.

Decided: January 22, 1996

Before:  BECKER, GREENBERG, Circuit Judges, and LANCASTER, *District Judge. Michael R. Needle (argued), Michael R. Needle, P.C., Philadelphia, PA, Lawrence E. Feldman, Law Offices of Lawrence E. Feldman, Elkins Park, PA, David B. Zlotnick, Zlotnick & Thomas, Tucson, AZ, for Appellants and the Class. Geoffrey D.C. Best (argued), Sara C. Kay, LeBoeuf, Lamb, Greene and MacRae, L.L.P., New York City, Randall D. Fisher, Leslie Brown, Adelphia Communications Corp., Coudersport, PA, Stephen W. Armstrong, Montgomery, McCracken, Walker & Rhoads, Philadelphia, PA, for Appellee.


Plaintiffs Amy and David Mallenbaum, on behalf of themselves and others similarly situated, sued defendant Adelphia Communications Corporation (“Adelphia”) in district court challenging its monthly fee to cable subscribers who receive programming on more than one television set.   Plaintiffs claim that this fee is an impermissible equipment charge under Title VI of the 1992 Cable Act (“Cable Act” or “Act”), 47 U.S.C. §§ 521-559, and a regulation promulgated thereunder, 47 C.F.R. § 76.923.   That regulation requires that charges for multiple outlets be based on actual cost.   Plaintiffs advance their challenge by two different means.

Plaintiffs first assert an express right of action.   Under 47 U.S.C. § 401(b), Federal Communications Commission (“FCC” or “Commission”) “orders” may be directly enforced by private parties in district court.   According to plaintiffs, § 76.923 should be construed as a direct “order” to cable operators giving rise to an express right of action.   Plaintiffs also assert an implied right of action under Section 3 of the 1992 Cable Act to contest the outlet charge.   The district court concluded that plaintiffs had neither an express nor an implied right of action.   It therefore dismissed the action for failure to state a claim upon which relief could be granted.1

We hold that plaintiffs lack an express right of action under 401(b) because an agency regulation is not a privately enforceable 401(b) order unless it requires the defendant to take a particular action.  Section 76.923 does not require defendant Adelphia to take any action with regard to additional outlet prices.   Moreover, plaintiffs do not have an implied right of action under the Cable Act because the Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975), factors are not met.   We therefore affirm.   Inasmuch as we resolve the case in this fashion, we need not decide whether or not Adelphia's additional outlet fee is based on actual cost, for even if the charge was not based on actual cost, plaintiffs have no cause to complain.

I. Facts

The 1992 Cable Act covers three types of cable television service:  basic, cable programming, and premium.   Basic service includes all broadcast signals and all public, educational, and government access channels carried by the system.   All cable subscribers must purchase basic service.   Cable programming service is video programming provided over a cable system other than on a per-channel or per-program basis.2  Premium service, offered on a per-channel or per-program basis, includes movie channels (e.g., HBO or Cinemax) and cultural and sporting events (e.g., pay-per-view concerts or prize fights).

Basic service rates may be regulated by a local franchising authority according to regulations promulgated by the FCC if the authority certifies to the Commission that it has the necessary authority and resources.  47 U.S.C. § 543(a)(2)-(3);  47 C.F.R. § 76.922.   Under 47 C.F.R. § 76.923, local franchising authorities that choose to regulate (they need not do so) must limit charges for multiple cable television receivers to actual cost.3  If the local franchising authority does not file a certification with the FCC, basic service rates remain unregulated.   If the FCC rejects or revokes franchising authority certification, the FCC regulates basic service rates until the authority is certified or recertified.  47 U.S.C. § 543(a)(4)-(6).   The FCC has sole authority to regulate rates for cable programming service.  47 U.S.C. § 543(a)(2).   Under the 1992 Cable Act, premium rates are unregulated.

After passage of the 1992 Cable Act, Adelphia notified its customers that it would charge $.95 per month for each outlet (beyond the first) that received any combination of cable television services.   Plaintiffs, in their district court action, argued that this charge violated the FCC regulation that limits rates for basic service on multiple television outlets to actual cost, 47 C.F.R. § 76.923.   The Mallenbaums' local franchising authority, the Township of Upper Dublin (PA), has not applied for certification to regulate these rates.   The plaintiffs assert, however, an express and an implied right of action to enforce § 76.923.

II. Discussion

A. Express Right of Action

Section 401(b) gives private individuals an express right to enforce FCC “orders.”   The statute provides:

If any person fails or neglects to obey any order of the Commission other than for the payment of money, while the same is in effect, the Commission or any party injured thereby, or the United States, by its Attorney General, may apply to the appropriate district court of the United States for the enforcement of such order.   If, after hearing, the court determines that the order was regularly made and duly served, and that the person is in disobedience of the same, the court shall enforce obedience to such order by a writ of injunction or other proper process, mandatory or otherwise, to restrain such person or the officers, agents, or representatives of such person, from disobedience of such order, or to enjoin upon it or them obedience to the same.

47 U.S.C. § 401(b) (emphasis added).   Thus, if the regulation regarding additional outlet charges, 47 C.F.R. § 76.923, is an “order,” plaintiffs would have the right to seek its enforcement in district court.

In determining whether an agency rule is an “order” under § 401(b), courts have generally used Columbia Broadcasting System, Inc. v. United States, 316 U.S. 407, 416-25, 62 S.Ct. 1194, 1199-1202, 86 L.Ed. 1563 (1942) [hereinafter “CBS ”], as a starting point.   While CBS involved a different statutory provision, 47 U.S.C. § 402(a),4 that case set forth the principle that whether an agency regulation is an “order” depends on the nature of the rule and its impact on litigants.   Specifically, an agency regulation should be considered an “order” if it requires a defendant to take concrete actions.

This principle led the Ninth Circuit to conclude in Hawaiian Telephone Co. v. Public Utilities Commission, 827 F.2d 1264 (9th Cir.1987), cert denied, 487 U.S. 1218, 108 S.Ct. 2870, 101 L.Ed.2d 906 (1988), that the FCC rule there at issue should be deemed an “order” under § 401(b).   Because the rule in that case required a particular action to be taken by the defendant (namely, that defendant Hawaii Public Utilities Commission follow certain procedures to separate costs and investments among interstate and intrastate telephone services), the rule was “appropriately interpreted as an ‘order’ ” enforceable by a private party against the defendant in district court.  Id. at 1272.5

Conversely, the CBS principle led this Court to conclude in PBW Stock Exchange, Inc. v. SEC, 485 F.2d 718, 732 (3d Cir.1973), cert. denied, 416 U.S. 969, 94 S.Ct. 1992, 40 L.Ed.2d 558 (1974), that the SEC rule in question was not enforceable under a provision of the Securities Exchange Act allowing judicial review of SEC “orders.”   Noting that the rule at issue was more akin to a general rulemaking than to an order, in that it was prospective and unrelated to specific rights and obligations of the litigants, we concluded that federal jurisdiction was absent.  Id. at 732-33.

 In the instant case, § 76.923 does not order defendant Adelphia (or other cable companies like it) to charge specific rates.   Rather, given the statutory framework, it is clear that this regulation is addressed not to cable operators but to local franchising authorities.   See 47 U.S.C. § 543(a)(2)-(3), (6).6  Thus, while § 76.923 offers guidelines to be followed by local franchising authorities that decide to regulate a cable company's fees for additional outlets, it does not in itself require particular actions to be taken by defendant Adelphia.   Therefore, following the principle enunciated in CBS and its progeny, § 76.923 is not an “order” under § 401(b).

Furthermore, as we have noted, the Mallenbaums' local franchising authority has not applied for certification.   Thus, under the 1992 Cable Act, Adelphia's rates for additional outlets remain unregulated.   See supra note 6.   As § 76.923 is inapplicable to Adelphia, plaintiffs have failed to state a claim.   For these reasons, plaintiffs have no express right of action.

B. Implied Right of Action

 We hold further that plaintiffs have no implied right of action under the Act.   In making this determination we use the four factor test set out in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975).   These factors are:

(1) whether plaintiff is a member of the class “for whose especial benefit the statute was enacted”;

(2) whether there is evidence of legislative intent to create or preclude the relief sought;

(3) whether the relief sought is consistent with the legislative scheme;

(4) whether the relief sought is the type that is “traditionally relegated” to states, such that federal relief would interfere with the state scheme.

Id. at 78, 95 S.Ct. at 2087.   Recent case law makes clear that the focus of our inquiry should be on the first two factors.   See, e.g., Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76, 99 S.Ct. 2479, 2488-89, 61 L.Ed.2d 82 (1979);  American Tel. & Tel. Co. v. M/V Cape Fear, 967 F.2d 864, 866 (3d Cir.1992).   It is clear that the Cable Act was not created for the especial benefit of the plaintiffs.   Subscribers residing in areas where no local franchising authority has sought FCC licensing are not intended to benefit from the 1992 Act, since rates in such municipalities are not regulated.   As to the second factor, Congress surely did not intend to give plaintiffs a private right of action to enforce the regulations.   Rather, in situations like this, Congress intended for rates to remain unregulated.   Since the first two Cort factors do not support the finding of an implied right, plaintiffs do not have an implied right of action under the Cable Act to enforce § 76.923.

The order of the district court will be affirmed.


1.   Although the district court couched some of its discussion in terms of standing and, at one point, styled its dismissal as a judgment on the pleadings, fairly read, the court actually dismissed the case under Rule 12(b)(6) for failure to state a claim upon which relief can be granted.

2.   Cable programming service includes a bundle of several channels.   For instance, if basic service only offered channels such as CNN, C-SPAN, and MTV, cable programming service might offer a package of additional channels such as ESPN, CNN Headline News, and C-SPAN 2.

3.   See infra note 6 and surrounding text.

4.   47 U.S.C. § 402(a) sets forth the procedures to “enjoin, set aside, annul, or suspend” any order of the Commission.

5.   Other circuits including the Sixth Circuit in Alltel Tennessee, Inc. v. Tennessee Public Service Commission, 913 F.2d 305, 308 (6th Cir.1990), and the Seventh Circuit in Illinois Bell Telephone, Co. v. Illinois Commerce Commission, 740 F.2d 566, 571 (7th Cir.1984), support the Ninth Circuit approach.   According to the First Circuit, however, only orders that are judicial in nature afford plaintiffs a private right of enforcement under § 401(b).   This approach was enunciated by Judge Breyer in New England Telephone and Telegraph Co. v. Public Utilities Commission, 742 F.2d 1 (1st Cir.1984), cert. denied, 476 U.S. 1174, 106 S.Ct. 2902, 90 L.Ed.2d 988 (1986).   That opinion relied on the Administrative Procedure Act (“APA”) which defines “order” as “a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than rulemaking,” 5 U.S.C. § 551(6).   Although the APA was enacted after the 1934 Communications Act, the court used the APA as “a guide in determining the proper construction of pre-existing, related procedural statutes-at least where other non-APA considerations also point clearly in the same direction.”  New England Tel. and Tel. Co., 742 F.2d at 5.   For the First Circuit, these considerations were, inter alia, protecting agency autonomy and maintaining a coherent communications policy.   We need not choose between the First Circuit and Ninth Circuit approaches, for, even assuming arguendo that some rules may be considered orders under § 401(b), the FCC rule at issue here may not.

6.   Section 76.923 is referenced by § 76.922, which in turn refers back to the language of 47 U.S.C. § 543.   That section provides:(2) Preference for competition․  If the Commission finds that a cable system is not subject to effective competition-(A) the rates for the provision of basic cable service shall be subject to regulation by a franchising authority, or by the Commission if the Commission exercises jurisdiction pursuant to paragraph (6), in accordance with the regulations prescribed by the Commission under subsection (b) of this section ․․(3) Qualification of franchising authority.   A franchising authority that seeks to exercise regulatory jurisdiction permitted under paragraph (2)(A) shall file with the Commission a written certification․․(6) Exercise of jurisdiction by Commission.   If the Commission disapproves a franchising authority's certification ․ or revokes such authority's jurisdiction ․ the Commission shall exercise the franchising authority's regulatory jurisdiction under paragraph (2)(A) until the franchising authority has qualified to exercise that jurisdiction by filing a new certification that meets the requirements of paragraph (3).47 U.S.C. § 543(a)(2)-(3), (6) (emphasis added in paragraph 2(A)).   Thus, under § 543, the franchising authority or (in particular circumstances) the Commission may regulate in accordance with the provisions set forth in § 76.923.

BECKER, Circuit Judge.

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