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Title Universal City Studios v. Peters

Argued February 17, 2005 Decided April 8, 2005

Subject Business

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 17, 2005 Decided April 8, 2005

No. 04-5138

UNIVERSAL CITY STUDIOS LLLP AND

UNIVERSAL CITY STUDIOS PRODUCTIONS LLLP,

APPELLANTS

MARYBETH PETERS,

IN HER OFFICIAL CAPACITY AS REGISTER OF COPYRIGHTS, AND

APPELLEES

No. 04-5142

METRO-GOLDWYN-MAYER STUDIOS, INC.,

APPELLANT

MARYBETH PETERS, THE REGISTER OF COPYRIGHTS OF THE

UNITED STATES OF AMERICA,

APPELLEE

Appeals from the United States District Court

for the District of Columbia

(No. 03cv01082)

(No. 03cv00179)

Randolph D. Moss argued the cause for appellants Univer-

sal City Studios, et al. With him on the briefs were Thomas P.

Olson, Edward N. Siskel, and Brian M. Boynton.

David E. Kendall argued the cause for appellant Metro-

Goldwyn-Mayer Studios, Inc. With him on the briefs was Vidya

S. Atre.

James J. Gilligan, Attorney, U.S. Department of Justice,

argued the cause for appellees Marybeth Peters, et al. With him

on the brief were Peter D. Keisler, Assistant Attorney General,

Kenneth L. Wainstein, U.S. Attorney, Gregory G. Katsas,

Deputy Assistant Attorney General, and Mark B. Stern, Attor-

ney.

Before: SENTELLE and ROBERTS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge ROBERTS.

ROBERTS, Circuit Judge: Cable and satellite companies are

required to pay royalties into a common fund when they

retransmit certain copyrighted television broadcasts. To collect

from the fund, copyright owners must file claims with the

Metro-Goldwyn-Mayer Studios (MGM) and Universal City

Studios had their claims rejected as untimely because they could

not produce a stamped postal receipt showing that the claims,

which were received at the Copyright Office in August, had

been mailed in July. The studios challenged the rejections in the

district court and now appeal a grant of summary judgment for

the Copyright Office. We affirm.

Congress has established a compulsory licensing scheme for

broadcast copyrighted material that is retransmitted by cable and

satellite companies. See 17 U.S.C. §§ 111, 119 (2000); Nat'l

Ass'n of Broadcasters v. Librarian of Congress, 146 F.3d 907,

91013 (D.C. Cir. 1998) (summarizing statutory framework).

Under this arrangement, cable and satellite companies are

permitted to retransmit broadcasts of over-the-air television

programming, provided that they deposit royalty fees with the

" d uring the month of July in each year" and "in accordance

with requirements that the Librarian of Congress shall prescribe

by regulation." Id. §§ 111(d)(4)(A), 119(b)(4)(A). Royalties

are distributed proportionally by means of settlement agree-

ments among the various claimants or arbitration. See Distribu-

tion of 1998 and 1999 Cable Royalty Fund, 68 Fed. Reg. 17,838

(Apr. 11, 2003).

considered timely if the claim (1) was actually received by the

Office during July, or (2) bears a July U.S. postmark and was

sent via the United States Postal Service. 37 C.F.R. § 252.4(a)

(2001). The regulations also expressly state that " c laims dated

only with a business meter that are received after July 31, will

not be accepted as having been timely filed." Id. § 252.4(c).

There is an exception to that provision, however, specifying that

if a claim was sent using certified mail return receipt requested

and the claimant can produce a mailing receipt bearing a July

U.S. Postal Service date stamp, the claim will be accepted as

being timely filed. Id. § 252.4(e). The regulations provide that

" n o affidavit of an officer or employee of the claimant, or of

a U.S. postal worker will be accepted in lieu of the receipt." Id.

The facts at issue are straightforward. MGM and Universal

are film and television production studios based in southern

California. MGM's royalty claims for the year 2000 arrived at

the Copyright Office on August 2, 2001. The envelope was sent

by certified mail and bore only a stamp from a Pitney Bowes

business postage meter. Universal's claims arrived the next day,

also by certified mail and bearing only a Pitney Bowes postage

meter stamp. Both studios estimate the value of their claims in

the millions of dollars.

The studios heard nothing from the Copyright Office until

November 2001, when each received word that their claims

would not be accepted unless they could produce a receipt with

a July U.S. Postal Service date stamp. Even at this remove, we

can sense the intensity of the searches that these letters must

have precipitated, but neither studio was able to locate a receipt.

Lacking a receipt, the studios mobilized their lawyers. They

separately responded with letters arguing that their claims were

timely filed because they had been mailed during July, which

was all the studios understood the Office's rules to require.

They submitted sworn statements from the employees responsi-

ble for mailing the claims, stating that the letters were mailed on

July 30, 2001. In addition, they presented declarations from

Postal Service employees about the normal delivery time for a

letter sent from southern California to Washington, D.C. (three

to five days) and statements from Pitney Bowes employees

attesting that the machines used by the studios are tamper-proof.

Universal later supplemented its initial submission with the

results of an in-house experiment showing that none of one

hundred letters sent to Washington from Van Nuys, California

arrived in fewer than three days -- suggesting that its own

claim, which arrived on August 3, must have been sent during

July. In the event the Office interpreted its rule to require a

postal receipt, each studio also requested a waiver.

The Copyright Office reached a final decision rejecting the

studios' claims on December 2, 2002. It interpreted its rules to

require a stamped USPS receipt for all claims received after the

end of July that do not bear a U.S. postmark. The Office

dismissed the evidence submitted by the studios, pointing to the

regulations' express bar on considering affidavits from claimant

or Postal Service employees "in lieu of the receipt." See 37

C.F.R. § 252.4(e). Moreover, it rejected the studios' waiver

requests on the ground that they presented no "special or unique

circumstance . . . that would warrant a waiver." Letter to Olson

& Moss, Dec. 2, 2002, at 6; Letter to Tunberg, Dec. 2, 2002, at

The studios filed complaints in the district court alleging

that the Office had acted in violation of the Copyright Act, the

Administrative Procedure Act, and the Due Process Clause of

the Fifth Amendment. The court found no merit to these

contentions and, in two separate opinions, granted summary

judgment for the Office. Metro-Goldwyn-Mayer Studios, Inc. v.

Peters, 309 F. Supp. 2d 48 (D.D.C. 2004); Universal Studios

LLLP v. Peters, 308 F. Supp. 2d 1 (D.D.C. 2004). The studios

appeal.

II.

The studios present several challenges to the Office's

rejection of their claims. First, MGM, but not Universal, argues

that the Office has incorrectly interpreted its regulations

regarding timely submission of claims. Second, both studios

argue that the denial of their waiver requests was arbitrary and

capricious because the Office has not consistently enforced its

regulations regarding timely filing. Third, the studios argue that

the Office violated due process by refusing to accept any

evidence, other than a stamped postal receipt, that their claims

were mailed in July. We review de novo the district court's

grant of summary judgment. Williams v. United States, 396

F.3d 412, 413 (D.C. Cir. 2005).

A. MGM argues that the Office's insistence on a postal

receipt, and exclusion of all other evidence of a July filing, is

"incompatible" with the Copyright Act and the implementing

regulations. The regulations do not, it argues, categorically bar

consideration of other evidence. MGM Br. at 25. On the

contrary, it maintains, the regulations' specific exclusion of

affidavits from claimant employees and postal workers implies

that other evidence will be considered. In addition, MGM relies

on the language of section 252.4(e), which states that a claimant

"may" prove proper filing by means of a stamped receipt, to

argue that the requirement is only permissive and that claimants

may prove proper filing by other means as well. See 37 C.F.R.

§ 252.4(e).

This is quite a stretch. The rules make clear that claims

arriving after July that do not bear a U.S. postmark will not be

accepted unless the claimant can produce a stamped receipt.

Section (c) states the general rule very clearly: "Claims dated

only with a business meter that are received after July 31, will

not be accepted as having been timely filed." Id. § 252.4(c).

Section (e) provides for the one and only exception to this rule

for claims without a U.S. postmark: " i n the event that a

properly addressed and mailed claim is not timely received by

the Copyright Office," claimants "may nonetheless prove"

proper filing using a receipt. Id. § 252.4(e). In other words, the

rule is only "permissive" in that it allows claimants their one

means of escaping the consequences of section (c).

Similarly, the provision excluding certain affidavits cannot

fairly be understood to imply that the Copyright Office is

required to consider other evidence. The regulations' evident

purpose is to exclude precisely the kind of factual inquiry MGM

seeks. See Copyright Arbitration Royalty Panels; Rules and

Regulations, 61 Fed. Reg. 63,715, 63,716 (Dec. 2, 1996) ("The

only acceptable proof of a timely filing . . . is the certified mail

return receipt bearing a U.S. Postal Service mark demonstrating

that the mailing occurred during the relevant time period to the

appropriate address."); Copyright Arbitration Royalty Panels, 59

Fed. Reg. 63,025, 63,039 (Dec. 7, 1994) (postmark requirement

"provides a bright line test which should end all questions of

fact regarding the timeliness of the claim"). The express

exclusion of the sort of evidence most likely to be submitted in

lieu of a receipt -- far from opening the door to other eviden-

tiary submissions -- was simply a way to "make assurance

double sure." WILLIAM SHAKESPEARE, MACBETH act 4, sc. 1.

An agency's interpretation of its own rules is entitled to

"substantial deference" and will be set aside only if "plainly

erroneous or inconsistent with the regulation." Thomas Jeffer-

son Univ. v. Shalala, 512 U.S. 504, 512 (1994) (citation omit-

ted); see also Carus Chemical Co. v. EPA, 395 F.3d 434, 439

(D.C. Cir. 2005). That is certainly not the case here; we have no

basis on which to set aside the Office's reading of the pertinent

regulations to bar the studios' claims as untimely.

B. MGM and Universal next argue that the Copyright

Office's failure to waive its rules and accept their claims was

"arbitrary, capricious, an abuse of discretion, or otherwise not in

accordance with law." 5 U.S.C. § 706(2)(A); see 17 U.S.C §

701(e). In making this claim, the studios run up against another

highly deferential standard. While an agency is required to

consider a waiver request, see BellSouth Corp. v. FCC, 162 F.3d

1215, 1224 (D.C. Cir. 1999), we will disturb a denial of waiver

only when "the agency's reasons are so insubstantial as to render

that denial an abuse of discretion," BDPCS, Inc. v. FCC, 351

F.3d 1177, 118182 (D.C. Cir. 2003) (citation omitted). An

"agency's strict construction of a general rule in the face of

waiver requests is insufficient evidence of an abuse of discre-

tion." Omnipoint Corp. v. FCC, 213 F.3d 720, 723 (D.C. Cir.

2000) (citation omitted).

The studios principally argue that the Copyright Office

failed to apply an established policy of accepting claims where

it could be assured the claim was in fact mailed in July. For its

part, the Office acknowledges a policy of accepting all claims

that arrive by mail on August 1, but denies any more extensive

waiver policy. The pertinent policy is set out in a 1995 Copy-

right Office letter:

T he Office has decided to accept all properly addressed

claims with only a business meter postmark if they were

actually in the Copyright Office on August 1, 1995, since

the Office has an absolute assurance that these claims must

have been deposited with the U.S. Postal Service during the

month of July in order to reach the Office by August 1,

1995. The Office, however, will not accept any properly

addressed claim with only a July business meter postmark

which arrives in the Office on August 2, 1995, or later,

because the absolute assurance of a July mailing with the

U.S. Postal Service does not apply.

Letter to Artis, Aug. 23, 1995, at 1; see also Letter to Adams,

Aug. 23, 1995, at 1. MGM and Universal argue that -- given

the declarations submitted by them and Universal's delivery-

time experiment -- the Office has the same "absolute assur-

ance" their claims were mailed during July as it has for claims

arriving on August 1.

The Office, however, gave a more than adequate explana-

tion why its policy does not apply. In referring to its having an

"absolute assurance," the Office did not commit itself to

conducting case-by-case inquiries into the factual circumstances

of each claim submission. Rather, its "decision applies a bright-

line test . . . and does not require the Office to rely on extrinsic

evidence or to engage in determining the probability that a claim

was mailed in July." Letter to Olson & Moss, at 7. The Office's

"absolute assurance" refers instead to its confidence that every

claim arriving on August 1 was mailed in July, without the need

for any inquiry concerning the circumstances of mailing. The

policy expressly states, after all, that the Office will not accept

claims arriving on August 2 or later -- a qualification clearly at

odds with the studios' more expansive understanding of the

policy.

The studios also seek refuge in several anomalies in the

Office's handling of claims from a decade ago. MGM finds one

instance in 1993 in which the Copyright Royalty Tribunal,

which formerly handled royalty claims, accepted a late-filed

claim from a claimant named Brissette TV.1 Brissette's claim

had been returned for an insufficient address, even though the

same address had effected delivery of its claims in prior years.

Universal points to two other instances of waiver. In one,

occurring in 1994, the Office agreed to accept a postal receipt

with a handwritten date, rather than an official date stamp. In

the other, a Copyright Office staff person accepted a claim after

conferring with an employee of the Joplin, Missouri post office,

from which the claim had been mailed, about a receipt that "had

not been dated by the Postal Service in the usual manner."

Letter from Gilligan to Kendall & Atre, June 13, 2003, at 1.

We cannot see how these episodes rendered the Office's

denial of waiver an "abuse of discretion." BDPCS, Inc., 351

F.3d at 118182. First, it is not at all clear that any of them are

indicative of the Office's current policies. The Brissette case

was handled by a different administrative body altogether.

Since it first started handling royalty claims in 1993, the

or office to the Copyright Royalty Tribunal." Copyright

Arbitration Royalty Panels; Rules and Regulations, 59 Fed. Reg.

2550, 2551 (Jan. 18, 1994). As far as handwritten receipts are

concerned, the regulations were revised in 1996 to require an

official date stamp -- a policy the Office has consistently

applied since. 61 Fed. Reg. at 63,71617; see, e.g., Letter to

Freeman, Feb. 17, 1999, at 1 (rejecting receipt with handwritten

date). In the Joplin case, about which little is known, the staff

person's decision to confer with the post office was apparently

1 The Copyright Royalty Tribunal handled cable and satellite

royalty claims until 1993, when that responsibility was transferred to

the Copyright Office. See Copyright Royalty Tribunal Reform Act of

1993, Pub. L. 103-198, 107 Stat. 2304.

unauthorized, and accordingly cannot rise to the level of agency

precedent.2 See Vernal Enterprises, Inc. v. FCC, 355 F.3d 650,

661 (D.C. Cir. 2004) ("staff error cannot bind an agency and

force it, in effect, to continue such errors").

Second, even if these instances in fact represent current

Office policy, they hardly cover the present cases. Two

involved receipts that were handwritten or improperly stamped.

There is an obvious difference between considering the manner

in which a submitted receipt has been executed and overlooking

the complete absence of one. In the Brissette case, the claimant

was given a one-time break because of its reliance on an address

that had worked in previous years. Nothing of the sort is

involved here; the present cases go instead to the core of a rule

clearly intended to preclude case-by-case inquiries into the time

of mailing. Granting a waiver based on the perceived strength

of the evidentiary submission in a particular case would deprive

such a rule of all force.

The studios ran a considerable risk by mailing their claims,

presumably, in the last days of July; they ran another risk by

failing to have their claims postmarked by the U.S. Postal

Service. None of this would matter had the studios been able to

locate the required receipts, but they have been unable to do so.

We would not go so far as the Motion Picture Association of

America and urge claimants to guard receipts "with your life,"

but the consequences of being unable to produce them were

clear. Kessler Memorandum, June 13, 2001, at 7. The regula-

tions gave the studios three different ways to establish the

timeliness of a claim -- actual receipt in July, July U.S. post-

mark, or July date-stamped postal receipt. The studios' three

strikes hardly suggest the kind of "special circumstances" that

2 While the Brissette waiver is set out in a letter from the

waivers are known only through the recollections of Office personnel.

might warrant waiver. Northeast Cellular Tel. Co. v. FCC, 897

F.2d 1164, 1166 (D.C. Cir. 1990).

C. Finally, the studios contend that the Office violated their

due process rights. There can be no question that the Office

gave the studios a meaningful opportunity to be heard concern-

ing whether their claims satisfied the Office's regulations,

including the postal receipt requirement. See Coalition of

Airline Pilots Ass'ns v. FAA, 370 F.3d 1184, 1188 (D.C. Cir.

2004). The studios' due process challenge instead focuses on

the receipt requirement itself. Their argument proceeds from the

premise that the critical issue is whether they mailed their claims

in July; the studios then contend that the Office has improperly

restricted the means by which a claimant may prove such timely

mailing, in violation of due process.3

This argument is entirely unpersuasive. MGM and Univer-

sal can rightly claim a property interest in the royalties to which

they are entitled by law. See Bd. of Regents of State Colleges v.

Roth, 408 U.S. 564, 577 (1972); Bloch v. Powell, 348 F.3d 1060,

1068 (D.C. Cir. 2003). They are entitled, however, to nothing

if they do not meet the terms of eligibility under the statute and

its implementing regulations. See Am. Mfrs. Mut. Ins. Co. v.

Sullivan, 526 U.S. 40, 6061 (1999). The studios assume that

they are entitled to royalties if they can prove they mailed their

claims in July, but this "misconstrues the Copyright Act and its

regulations by equating mailing with filing." Universal Studios,

3 The studios present their due process arguments differently.

Universal argues that only the "substantive" provisions of the

the scope of its property interest. Univ. Br. at 5455. MGM argues

that the regulations create an unconstitutional irrebuttable presumption

that a claim was not properly filed absent a stamped postal receipt.

MGM Br. at 3132. For our purposes, these arguments amount to the

same thing.

308 F. Supp. 2d at 15; see 17 U.S.C. §§ 111(d)(4)(A),

119(b)(4)(A) (claimants must file " d uring the month of July in

each year" and "in accordance with requirements that the

Librarian of Congress shall prescribe by regulation"). As the

Supreme Court recently confirmed, "due process does not

require the opportunity to prove a fact that is not material to the

. . . statutory scheme." Conn. Dep't of Pub. Safety v. Doe, 538

U.S. 1, 4 (2003). Under the regulations, the studios are not

entitled to royalties on a claim that arrives in August without a

July U.S. postmark or a stamped postal receipt, regardless of

how compelling the proof may be that the claim was mailed in

July. The regulations themselves -- all of them -- define what

constitutes proper filing, under the express terms of the statute.

See United States v. Locke, 471 U.S. 84, 103 (1985). And under

those regulations, the studios are out of luck.

Affirmed.


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