Net Neutrality Proponents, Foes Disagree on Whether D.C. Circuit Likely To Stay FCC Order

The odds are only one in three that the D.C. Circuit panel selected to hear the case will grant a stay (see 1505280052), suggested Guggenheim Partners analyst Paul Gallant in a research note last week. Gallant noted among other factors the makeup of the panel. Two of the three judges are Sri Srinivasan and Cornelia T.L. Pillard, both appointed by President Barack Obama. The third, Thomas Griffith, was appointed by President George W. Bush. Several lawyers said the D.C. Circuit is becoming less conservative, as more Democratic appointees join the court.

Under current case law, appeals courts essentially look at four factors in reaching a decision on a stay request, said Berin Szoka, president of TechFreedom. They are whether the stay applicant has made a strong showing that the challenge is likely to succeed on the merits, whether the appellant will be “irreparably injured” without a stay, whether issuance of the stay will injure other parties substantially and “where the public interest lies,” he said.

Szoka thinks Gallant’s analysis is wrong and chances are closer to 50/50 the court will stay the order. “I think the petitioners have a very strong argument on notice grounds, and many other good arguments,” Szoka told us. “So even if their injury argument isn't a slam dunk, they could still get a stay. The FCC of course will argue that a stay will harm edge companies. But the FCC's argument would be pretty weak, given that it can offer only a handful of examples of alleged net neutrality violations -- and all of these were either addressed quickly by the market or could have been addressed by other laws.”

But Fred Campbell, executive director of the Center for Boundless Innovation in Technology and former chief of the Wireless Bureau, said winning on a stay is never easy. “It’s unusual for a court to stay agency rules on statutory grounds,” he said, adding it would be a win for ISPs if the court does nothing more than grant their request for expedited review. “Either way, the court’s decision won’t tell us anything about the likelihood of a successful challenge on the merits,” Campbell said. “The FCC’s First Amendment case is particularly weak, but the parties didn’t raise it in the stay proceeding. Even if the FCC can ultimately convince the court that the agency has statutory authority to classify the Internet as a common carrier service, it’s very likely to lose on constitutional grounds.”

Public Knowledge is “extremely confident” that as long as the court decides the case based on law the stay request will be denied, said Senior Vice President Harold Feld. “The strongest argument the carriers have is not a substantive one but an unspoken one: ‘court, we're promising to abide by net neutrality (the 3 bright line rules), this is a big, big scary change,’” Feld said in an email. “‘Just hold things in place until after you get a chance to decide the case. What's the harm in granting a stay during accelerated briefing schedule?’ That's an appealing argument to a court, even if it is not supposed to be the basis for a decision.” But intervenors supporting the FCC have already demonstrated the harms a stay could cause, he said. "I am fairly confident that the court will deny the stay, but I can't rule out the reflex to 'maintain the status quo' pending a decision.”

D.C. Circuit Hard to Predict

Courts, particularly the D.C. Circuit, are hard to predict, said Andrew Schwartzman, Georgetown Institute for Public Representation senior counsel and a supporter of the rules. Schwartzman said a stay would be inappropriate and he doubted the court would impose one, but he recognized there is uncertainty.

A stay is “as unlikely as it is unwarranted,” said Michael Calabrese, director of New America’s Wireless Future Project, which also intervened at the court in favor of the FCC. “If there is any risk of irreparable harm, it is that a stay could enable carriers to engage in conduct that harms edge providers and consumers,” he said. “While the open Internet order forbears from rate regulation and does not prohibit anything carriers are currently doing, carriers could exploit a stay to degrade points of interconnection to extract payments, or apply data caps in anti-competitive ways, or engage in other conduct that harms consumers, edge providers and innovation.”

"The odds of the petitioners winning the case, on some basis or the other, are greater than the odds of the court granting the stay,” said Randolph May, president of the Free State Foundation and a former associate general counsel at the FCC. May also pegged the odds of a stay at 50/50. “The petitioners have conceded, whether wisely or not, that they are going to abide by the three specific mandates in the agency's order that ban blocking, degrading, and paid prioritization,” he said. “With that concession, articulation of immediate harm pending a decision on the merits becomes more problematic.” But May said the argument real harm will result from the order “to the petitioners and to the public at large, is pretty compelling and the agency's order is vulnerable on a number of legal points.”

Scott Cleland, chairman of NetCompetition, is confident the court will give ISPs the stay they seek. Cleland, a former financial analyst, said the chances of a stay are enhanced by the radical change inherent in the order, which reverses decades of policy by reclassifying broadband under Title II of the Communications Act. “In order for the FCC to win this, they have to get sweeping deference,” Cleland said. “Their entire Title II case depends on near carte blanche deference.” The likelihood most stays will be granted is only about 10 percent, he said: “Stays are very rare. But this is not a run-of-the-mill stay request.”

“I thought the plaintiffs’ brief was excellent,” said John Mansell, industry consultant and former financial analyst. “They made a very good case, especially on interconnection. … I think they’re likely to win on that.” But Mansell isn't sure the court will grant a stay: “It’s tough because there’s no real concrete harm anybody can point to yet.”

"Conventional wisdom says stays are hard to get because it is so difficult to clear the high hurdles of the irreparable harm and likelihood of success on the merits prongs,” said a former FCC official who represents industry clients opposed to the rules. “But with the FCC's order reinterpreting Section 332 in such a novel and radical fashion, wireless ISPs, especially smaller WISPs [wireless Internet service providers], have plenty of large caliber legal and factual ammo to deploy in convincing judges of their arguments.”

Other industry lawyers, who would only speak on background mostly because they represent clients involved in the case, agreed that getting a stay from a court is never easy. “You’ve got a basic reclassification, which the D.C. circuit basically invited them to do,” said a lawyer with a mix of communications clients not directly involved in the case. “Weirder things have happened, but I have a hard time seeing a stay,” said a seasoned regulatory attorney. “Stays are always hard.”