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No. 98-1682: United States v. Playboy Entertainment Group


No. 98-1682


In the Supreme Court of the United States
OCTOBER TERM, 1998

UNITED STATES OF AMERICA, ET AL., APPELLANTS
v.
PLAYBOY ENTERTAINMENT GROUP, INC.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

JURISDICTIONAL STATEMENT














CHRISTOPHER J. WRIGHT
General Counsel
Federal Communications
Commission
Washington, D.C. 20544

SETH P. WAXMAN
Solicitor General
Counsel of Record
WILLIAM B. SCHULTZ
Acting Assistant Attorney
General
EDWIN S. KNEEDLER
Deputy Solicitor General
JAMES A. FELDMAN
Assistant to the Solicitor
General
JACOB M. LEWIS
EDWARD HIMMELFARB
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217


QUESTIONS PRESENTED
Section 505 of the Telecommunications Act of 1996, Pub. L. No. 104-104,Tit. V, 110 Stat. 136, requires that a cable television operator "providingsexually explicit adult programming or other programming that is indecenton any channel of its service primarily dedicated to sexually-oriented programming"either "fully scramble or otherwise fully block the video and audioportion of such channel so that one not a subscriber * * * does not receiveit," or, alternatively, not provide that programming "during thehours of the day (as determined by the [Federal Communication] Commission)when a significant number of children are likely to view it."
The questions presented are:
1. Whether Section 505 violates the First Amendment.

2. Whether the three-judge district court was divested of jurisdiction todispose of the government's post-judgment motions under Rules 59(e) and60(a) of the Federal Rules of Civil Procedure by the government's filingof a notice of appeal while those motions were pending.

PARTIES TO THE PROCEEDINGS
Appellants are the United States of America, Janet Reno, Attorney General,the United States Department of Justice, and the Federal CommunicationsCommission. Appellee is Playboy Entertainment Group, Inc. Spice EntertainmentCompanies, Inc. (formerly Graff Pay-Per-View), was a party below but, afterfailing to obtain a preliminary injunction, chose not to participate inlitigation of the merits. Spice has since been purchased by Playboy.



In the Supreme Court of the United States
OCTOBER TERM, 1998

NO. 98-1682
UNITED STATES OF AMERICA, ET AL., APPELLANTS
v.
PLAYBOY ENTERTAINMENT GROUP, INC.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

JURISDICTIONAL STATEMENT

OPINIONS BELOW

The opinion of the three-judge district court (App., infra, 1a-39a) is reportedat 30 F. Supp. 2d 702. The permanent injunction (App., infra, 87a-88a) andthe order denying the government's post-trial motions (App., infra, 91a-92a)are unreported. The opinion of the district court denying a preliminaryinjunction (App., infra, 40a-86a) is reported at 918 F. Supp. 772. The opinionof the district court granting a temporary restraining order is reportedat 918 F. Supp. 813. The order of this Court affirming the denial of a preliminaryinjunction is reported at 520 U.S. 1141.

JURISDICTION

The permanent injunction of the three-judge district court, dated December29 1998, was entered on December 30, 1998. The government filed a noticeof appeal on January 19, 1999 (a Tuesday after a Monday holiday). On March10, 1999, Justice Souter extended the time for filing a jurisdictional statementto and including April 19, 1999. On March 18, 1999, the district court enteredan order dismissing the government's motions to alter or amend the judgmentand to correct the judgment. On April 7, 1999, the government filed a secondnotice of appeal, from both the original injunction and the order dismissingthe government's post-trial motions. The jurisdiction of this Court restson Section 561(b) of the Telecommunications Act of 1996, Pub. L. No. 104-104,110 Stat. 143, and 28 U.S.C. 1253.
CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED
The First Amendment of the United States Constitution provides that "Congressshall make no law * * * abridging the freedom of speech." Sections504, 505, and 561 of the Telecommunications Act of 1996, Pub. L. No. 104-104,110 Stat. 136, 142, are reproduced at App., infra, 96a-101a.

STATEMENT

This action arises out of Congress's efforts to address the problem of "signalbleed" of cable television channels that are devoted to sexually explicit,"adult" programming. Signal bleed is a phenomenon occurring inmost cable television systems. It is associated with the practice of cabletelevision operators of "scrambling" or otherwise blocking thesignal for their "premium" channels (channels for which an additionalcharge is imposed) to ensure that cable customers who have not subscribedto those channels do not receive programming for which they have not paid.Signal bleed occurs when non-subscribers receive a signal that is only partiallyscrambled: the video signal can be discerned at random intervals, and theaudio signal is often not scrambled at all.
1. Approximately 62 million households nationwide receive cable television.App., infra, 53a. Cable customers typically are offered a "basic"package of channels for a monthly fee, but they also may subscribe at anadditional monthly fee to premium channels that provide sports programming,recently released movies, or adult, sexually explicit entertainment. Id.at 5a. Cable customers may also order premium programming on a pay-per-viewbasis, permitting the customer access to a particular movie or sportingevent for a specified additional fee. Ibid.
To ensure that cable customers who have not paid for premium programmingare not able to view it, most cable operators scramble the programming attheir central transmission facility using either "RF" or "baseband"technology. RF scrambling causes the picture to jump and roll on the televisionsets of customers who are not authorized to receive the premium channel,although the images on the screen can at times be discerned. The cable systemprovides customers who are authorized to receive the premium channel witha set-top device, called a converter, which is connected between the subscriberline and the television set to counteract the scrambling and permit clearreception of the channel. RF scrambling does not affect the audio portionof the signal, and, as a result, the scrambling does not prevent the audioportion from being heard clearly on all customers' television sets at alltimes. App., infra, 7a.
Modern baseband scrambling, in contrast, renders the video portion of thesignal unintelligible. As with RF scrambling, subscribers authorized toreceive the programming are given converters to permit clear reception.Some baseband scrambling systems also encrypt the audio portion of the signal,so that no intelligible audio is presented to customers who do not subscribeto the scrambled premium service. For the most part, however, cable operatorsuse RF scrambling, or prior generations of baseband scrambling, which donot render the video completely unintelligible and do not scramble the audioat all. App., infra, 7a-8a.
The limitations of these scrambling systems give rise to the "signalbleed" problem. In any system where premium programming is carried,all customers of the system receive the scrambled signal on all televisionshooked up to the customer's line. As a result, all customers who are non-subscribersto a premium service typically receive a partially scrambled video signaland a completely clear audio signal. App., infra, 9a.

2. Congress enacted the statutory provision at issue in this case, Section505 of the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat.136, to address the problem of signal bleed in the context of cable channelsthat are devoted to sexually explicit, "adult" programming. Congresswas "aware that some cable systems [were] permitting 'adult' programsthat [were] clearly unsuitable for children to be received in the home withoutsufficient scrambling." S. Rep. No. 367, 103d Cong., 2d Sess. 103 (1994).Senator Feinstein, one of the sponsors of Section 505, explained that "[p]arents* * * come home after work only to find their children * * * watching orlistening to the adults-only channel, a channel that many parents did noteven know existed." 141 Cong. Rec. S8167 (daily ed. June 12, 1995).As an example, she referred to the fact that a "partially scrambledpornography signal was broadcast only one channel away from a network broadcastingcartoons and was easily accessible for children to view." Ibid.
Congress's concerns were triggered by complaints from across the country.For example, Mr. Anthony Snesko had made 550 copies of a videotape showingthe Spice Channel as it appeared on his television in Poway, California,at 9:00 in the morning sometime in April or May, 1994, and had distributeda copy to every Member of the House and Senate. DX 1, 47.1 In December 1995,a mother from Cape Coral, Florida, complained to her Representative thatshe had recently found her eight-year-old son, seven-year-old daughter,and a playmate watching Spice at 4:00 in the afternoon, "transfixed"by scenes of "a naked man sodomizing a woman" together with the"groans and epithets that go along." DX 55. In 1993, Senator Bidenurged the Federal Communications Commission to review a cable company'scompliance with federal law after large numbers of Delaware residents voicedobjections about unwanted reception of Spice. DX 72. See also DX 59, 61,70 (constituent letters complaining about inadequately scrambled "sexchannels" and their availability to children).
In her floor statement, Senator Feinstein acknowledged that it was alsoopen to Congress to require cable operators to provide complete blockingof audio and video signals free of charge on any channel-not merely thoseshowing sexually explicit programming-at the request of a subscriber. Thatis the approach Congress ultimately included in Section 504 of the TelecommunicationsAct of 1996, 110 Stat. 136. But Senator Feinstein explained that the proposalfor blocking on demand did not "go[] far enough," because it would"put the burden of action on the subscriber * * * by requiring a subscriberto specifically request the blocking of indecent programming." 141Cong. Rec. at S8167.

3. Section 505 became law on February 8, 1996, when the President signedthe Telecommunications Act of 1996, 110 Stat. 56. Under Section 505, "[i]nproviding sexually explicit adult programming or other programming thatis indecent on any channel of its service primarily dedicated to sexually-orientedprogramming, a multichannel video programming distributor"-a term thatincludes a cable operator-"shall fully scramble or otherwise fullyblock the video and audio portion of such channel so that one not a subscriberto such channel or programming does not receive it." 110 Stat. 136(codified at 47 U.S.C. 561 (Supp. II 1996)). Until the cable operator complieswith those requirements, it "shall limit the access of children"to such programming "by not providing such programming during the hoursof the day (as determined by the [Federal Communications] Commission) whena significant number of children are likely to view it." Ibid.
On March 5, 1996, the Federal Communications Commission issued an interimrule for implementation of Section 505. Order and Notice of Proposed Rulemaking,In re Implementation of Section 505 of the Telecommunications Act of 1996,11 F.C.C.R. 5386 (Implementation of Section 505). First, the Commissioninterpreted the term "sexually explicit adult programming," asused in Section 505, to be a category of "programming that is indecent,"a phrase also used in the statute. Implementation of Section 505 ¶¶6, 9. The Commission defined "indecent programming" on an interimbasis to mean "any programming that describes or depicts sexual orexcretory activities or organs in a patently offensive manner as measuredby contemporary community standards for the cable medium," and proposedto adopt that definition on a permanent basis. Id. ¶ 9. As the Commissionexplained, that is essentially the same definition adopted by the Commissionfor purposes of regulating indecent broadcast programs and telephone messages.
The Commission also proposed, and provisionally adopted, a safe harbor forpurposes of Section 505's time-channeling requirement of 10 p.m. to 6 a.m.,the same safe-harbor hours previously established for airing indecent broadcasttelevision or radio programs. Implementation of Section 505 ¶¶5, 8; see also 47 C.F.R. 73.3999. The final rules implementing Section 505became effective on May 18, 1997. In re Implementation of Section 505 ofthe Telecommunications Act of 1996, 12 F.C.C.R. 5212 (Apr. 17, 1997).

4. Appellee Playboy Entertainment Group provides "virtually 100% sexuallyexplicit adult programming," App., infra, 5a-6a, for transmission bycable operators to premium subscribers who choose to order Playboy's programming.Playboy provides such programming via its Playboy Television and AdulTVisionnetworks. Id. at 5a. On February 26, 1996, Playboy filed suit in the UnitedStates District Court for the District of Delaware seeking declaratory andinjunctive relief against the operation of Section 505. The complaint allegedthat Section 505 violated Playboy's rights under the First Amendment andthe equal protection component of the Due Process Clause of the Fifth Amendment.The district court consolidated the action with a similar action broughtby Spice Entertainment Companies (formerly known as Graff Pay-Per-View),which operated channels similar to those operated by Playboy.2 A three-judgecourt was convened pursuant to Section 561 of the Telecommunications Act,110 Stat. 142, 47 U.S.C. 223 note (Supp. II 1996).
On November 8, 1996, the three-judge court issued a decision denying Playboy'smotion for a preliminary injunction, stating that Playboy and Spice "ha[d]not persuaded us that they are likely to prevail on the merits." App.,infra, 63a.3 Reviewing Section 505 under "strict scrutiny or somethingvery close to strict scrutiny" as a content-based restriction on speech,id. at 67a, the court held that Section 505 is carefully tailored to furtherthe compelling interest in protecting children. The court explained thatSection 505 "does not seek to ban sexually explicit programming, nordoes it prohibit consenting adults from viewing erotic material on premiumcable networks if they so desire." Id. at 78a. Instead, the court explained,Section 505 permits cable operators to provide sexually explicit programmingto willing subscribers if the operators avail themselves of either of tworemedies to protect nonsubscribers-full scrambling of audio and video ortime-channeling. Id. at 76a.

5. Playboy appealed the denial of its request for a preliminary injunctiondirectly to this Court, which summarily affirmed. 520 U.S. 1141 (1997).

6. The case was tried before the district court on March 4-6, 1998. On December28, 1998, the district court issued a decision holding that Section 505is unconstitutional under the First Amendment.
The court held, as it had at the preliminary injunction stage, that "eitherstrict scrutiny or something very close to strict scrutiny," shouldbe applied. App., infra, 23a. The court also held that Section 505 is constitutionalonly if the government proves that it "is a 'least restrictive alternative,'i.e., that no less restrictive measures are available to achieve the sameends the government seeks to achieve." Id. at 26a.
The court noted that the government asserted three compelling interestssupporting Section 505: "the Government's interest in the well-beingof the nation's youth-the need to protect children from exposure to patentlyoffensive sex-related material"; "the Government's interest insupporting parental claims of authority in their own household-the needto protect parents' right to inculcate morals and beliefs on their children";and "the Government's interest in ensuring the individual's right tobe left alone in the privacy of his or her home-the need to protect householdsfrom unwanted communications." App., infra, 26a-27a. Although it expressedsome doubt about the strength of the empirical evidence in the record regardingharm to minors, see id. at 30a, the court held that all three of those interestsare present and, in sum, are compelling. Id. at 32a.
The court held, however, that Section 505 is not the least restrictive alternativethat the government could have adopted to advance those interests. App.,infra, 35a. The court noted that Section 505 requires complete scramblingof the video signal even to households without children, and the court concludedthat Section 505's alternative of time channeling restricts "a significantamount of protected speech," because "30-50% of all adult programmingis viewed by households prior to 10 p.m." Id. at 33a. In the court'sview, Section 504, by contrast, is a content-neutral provision that permitssubscribers voluntarily to request a free blocking device, thus avoidingthe need for full scrambling or time channeling. Id. at 34a-35a.
The court acknowledged that an alternative must be not only less restrictivebut also "a viable alternative." App., infra, 35a. In this respect,the court acknowledged that under Section 504 "parents usually becomeaware of the problem only after the child has been exposed to signal bleed,and then the damage has been done," and that even if parents are awareof the problem, "the success of § 504 depends on parental awarenessthat they have the right to receive a lockbox free of charge." Ibid.The court was unable to find that the experience during the 14-month periodin which Section 504 was in effect but Section 505 was enjoined (see note3, supra) was sufficient to alleviate the court's concerns regarding theadequacy of notice to customers under Section 504. Specifically, notwithstandingthe applicability of Section 504 during that time, cable operators stillhad distributed blocking devices on request to fewer than one-half of onepercent of subscribers.4 The court stated, however, that the "minimallockbox distribution is equally consistent with an ineffective statute asit is with a societal response that signal bleed is not a pervasive problem."Id. at 36a. In the court's view, then, either there has not been "adequatenotice to subscribers" or "[p]arents may have little concern thatthe adult channels be blocked." Ibid.
The court set forth in some detail what would constitute "adequatenotice" under Section 504. First, the court explained, it should includea basic notice to subscribers that children may be viewing signal bleedfrom sexually explicit programming and that blocking devices are readilyavailable free of charge. App., infra, 36a-37a. Next, the court stated thatsuch notice would have to be provided by "[a]ppropriate means,"including "inserts in monthly billing statements," "on-airadvertisement on channels other than the one broadcasting the sexually explicitprogramming," and "a special notice" when a cable operator"change[s] the channel on which it broadcasts sexually explicit programming."Id. at 37a. The cable operator would have to provide the means whereby "arequest for a free device to block the offending channel can be made bya telephone call" to the cable operator. Ibid. Finally, the noticeshould be given "on a regular basis, at reasonable intervals"and whenever a cable operator "change[s] the channel on which it broadcastssexually explicit programming." Ibid.
The court held that when enhanced with such "adequate notice,"Section 504 would be "a less restrictive alternative to § 505."App., infra, 38a. The court explained that "with adequate notice ofthe issue of signal bleed, parents can decide for themselves whether itis a problem," and "to any parent for whom signal bleed is a concern,§ 504, along with 'adequate notice,' is an effective solution."Id. at 37a-38a. The court recognized that it could not require cable operatorsto provide "adequate notice," because as non-parties the operatorswere not subject to the court's jurisdiction. But the court pointed outthat it did have jurisdiction over Playboy, and declared that it would requirePlayboy to include notice provisions in its contractual arrangements withcable operators. The district court then reiterated that unless adequatenotice is provided, Section 504 would not be a viable alternative to Section505. Id. at 38a.
7. On December 29, 1998, the day after announcing its decision, the courtissued an order permanently enjoining enforcement of Section 505. App.,infra, 87a-88a. The order did not contain any requirement that Playboy include"adequate notice" provisions in its contracts with cable operators.Nor did it limit the scope of the injunction to Playboy, which is the onlyprogrammer of sexually explicit broadcasting that remains a party to thislawsuit.
On January 12, 1999, the government filed a motion under Rule 59(e) of theFederal Rules of Civil Procedure seeking to alter or amend the judgmentto limit the injunction to Playboy, and it filed a motion under Rule 60(a)seeking to correct the judgment by including the requirement mentioned inthe court's opinion-that Playboy ensure that its contracts require cableoperators to provide "adequate notice" to cable customers. Thegovernment then filed a notice of appeal on January 19, 1999, 20 days afterentry of the injunction, as provided in Section 561(b), 110 Stat. 143, ofthe Act. App., infra, 89a-90a; see page 1, supra.
On March 18, 1999, the district court dismissed the government's two motions,stating that it "lack[ed] jurisdiction to adjudicate these motionsdue to subsequent filing of Defendants' notice of appeal to the United StatesSupreme Court." App., infra, 91a-92a. On April 7, 1999, the governmentfiled a second notice of appeal, addressed to both the original injunctionand the March 18 order. Id. at 93a-95a.
THE QUESTIONS PRESENTED ARE SUBSTANTIAL
The three-judge district court has held Section 505 of the TelecommunicationsAct of 1996 unconstitutional and enjoined its application throughout thecountry. The court based that holding solely on its conclusion that a hypotheticalstatute similar to Section 504 of the Act, but with complex, enhanced noticerequirements, would be a less restrictive alternative to Section 505. Thecourt's analysis was deeply flawed, and its judgment invalidating an Actof Congress warrants plenary review by this Court.
First, the court applied the strictest form of scrutiny, ruling that Section505 could survive only if it were less restrictive than any alternative,including the court's untried theoretical construct of a Section 504-typeregulation enhanced by an extensive but imprecise notice requirement. InDenver Area Educational Telecommunications Consortium, Inc. v. FCC, 518U.S. 727, 755 (1996), the plurality reserved the question whether strictscrutiny applies to regulation of indecency on cable television. The districtcourt here decided that question and did so incorrectly, thus subjectingindecent programming distributed by cable to a different First Amendmentstandard than identical material broadcast through the air. Had it not doneso, the court would have concluded that Section 505 is constitutional.
Second, the district court's ruling is illogical even on its own terms,because it has not been established that even the enhanced version of Section504 that the court hypothesized would in practice be less restrictive thanSection 505, and it would not in any event protect the compelling intereststhat the court itself recognized. Based on the court's own findings, ifany significant number of subscribers opted to request blocking of signalbleed, economics would lead to the means of compliance that the districtcourt found to have resulted under Section 505-cable operators would timechannel sexually explicit programming services or simply drop them altogether.In addition, in analyzing whether its hypothetical enhanced Section 504-typeregulation would adequately serve the interests protected by Section 505,the court entirely ignored society's independent interest in protectingminors from exposure to explicit sexual material. Had the court taken thatinterest into account, it would have found any version of Section 504 tobe an inadequate alternative.
A. 1. As a general matter, "[t]he government may * * * regulate thecontent of constitutionally protected speech in order to promote a compellinginterest if it chooses the least restrictive means to further the articulatedinterest." Sable Communications, Inc. v. FCC, 492 U.S. 115, 126 (1989).This Court has never applied that "strict scrutiny" standard,however, to the regulation of indecency on radio or television. Instead,in FCC v. Pacifica Foundation, 438 U.S. 726, 750 (1978), the Court statedthat "special treatment of indecent broadcasting" is "amplyjustif[ied]" and upheld a time-channeling regulation of indecency onbroadcast radio that would have been constitutionally infirm in many othercontexts. See ibid. The Court explained that among the justifications forsuch "special treatment" are the facts that "the broadcastmedia have established a uniquely pervasive presence in the lives of allAmericans"; that indecency on television or radio "confronts thecitizen * * * in the privacy of the home"; that "[b]ecause thebroadcast audience is constantly tuning in and out, prior warnings cannotcompletely protect the listener or viewer from unexpected program content";and that "broadcasting is uniquely accessible to children, even thosetoo young to read." Id. at 748-749.
The Court has repeatedly reaffirmed the principles of Pacifica. For example,in Sable, the Court noted that Pacifica's "special treatment of indecentbroadcasting" is justified because the regulation at issue there "didnot involve a total ban on broadcasting indecent material," but instead"sought to channel it to times of day when children most likely wouldnot be exposed to it." 492 U.S. at 127. In addition, the Court pointedout that Pacifica "relied on the 'unique' attributes of broadcasting,noting that broadcasting is 'uniquely pervasive,' can intrude on the privacyof the home without prior warning as to program content, and is 'uniquelyaccessible to children, even those too young to read.'" Ibid. (quotingPacifica, 438 U.S. at 733). More recently, in Reno v. ACLU, 521 U.S. 844(1997), the Court held that "the most stringent review" appliesto regulation of indecency on the Internet, but it reaffirmed that "specialtreatment of indecent broadcasting" by means of non-criminal regulationis appropriate, essentially for the reasons given above, id. at 866-868.

2. The Court has not yet definitively decided whether the more relaxed standardthat applies to time-channeling regulation of indecency on broadcast radioand television also applies to regulation of indecency on cable television.In Denver Area, the plurality stated that it "need [not] determinewhether, or the extent to which, Pacifica does, or does not, impose somelesser standard of review where indecent speech is at issue" in a challengeto regulations of cable television. 518 U.S. at 755. But the plurality inDenver Area also relied heavily on Pacifica to uphold one of the cable televisionregulations at issue there. Id. at 744-748. Moreover, it distinguished Sable,in which the Court held unconstitutional a ban on indecent telephone messages,on the ground that Sable, unlike Denver Area, involved "a total governmentallyimposed ban on a category of communications, but also involved a communicationsmedium, telephone service, that was significantly less likely to exposechildren to the banned material, was less intrusive, and allowed for significantlymore control over what comes into the home than either broadcasting or thecable transmission system before us." Id. at 748. The plurality concludedthat, with respect to the way in which "parents and children view televisionprogramming, and how pervasive and intrusive that programming is[,] * ** cable and broadcast television differ little, if at all." Ibid.
As the plurality noted in Denver Area, the factors on which the Court basedits decision to apply "special treatment" to time-channeling ofindecent over-the-air radio and television programming apply with at leastequal force to indecent cable television programming. See 518 U.S. at 744-745,748. Children may just as easily obtain access to indecency broadcast oncable television as to similar materials on broadcast channels. Moreover,the regulation at issue in this case, like the regulation at issue in Pacifica,is not a criminal prohibition or an outright ban on indecent speech; itpermits cable operators to "time channel" indecent material tothe same late-night hours as in Pacifica, and it also permits operatorsto provide indecent material at any time, so long as they eliminate unwantedsignal bleed. Finally, as in Pacifica, "warnings could not adequatelyprotect the listener from unexpected [signal bleed]." Reno, 521 U.S.at 867.

3. The district court in this case gave no weight to the concerns on whichthe Court relied in sustaining special treatment of regulation of broadcastindecency in each of the above cases. The district court did note that "thecontext of [Section 505's] content-based restriction must * * * be considered,"because "[c]able television is a means of communication that is bothpervasive and to which children are easily exposed." App., infra, 26a.But the court proceeded to attach essentially no significance to that "context"in holding that "[t]he Government must prove that * * * no less restrictivemeasures are available to achieve the same ends the government seeks toachieve." Ibid. Indeed, the court applied its "least restrictivealternative" test in a particularly rigorous manner, holding that Section505 was unconstitutional solely because the court could imagine an alternative,entirely hypothetical scheme whose practicality, cost, and legality havenever been tested.
Whether a scheme of adequate notice could be devised without resulting inexorbitant costs or raising other legal problems is open to substantialdoubt. In this regard, it is significant that the district court's scheme,though modeled on Section 504, would be far more complex and uncertain.It would involve requirements, enforceable only against Playboy that operators(who have a financial incentive to minimize subscriber requests for blockingdevices) notify customers at regular (though unspecified) intervals, andvia a variety of means, of the problem of signal bleed, the availabilityof blocking devices at no charge, and even the means-"a telephone call"to the cable operator, App., infra, 37a-by which a subscriber could obtainthe devices. Indeed, the court held such a scheme to be a "viable"alternative to Section 505 notwithstanding the fact that there was literallyno evidence in the record that such a scheme would work to provide genuinelyadequate notice and a genuinely free choice. The only evidence that wasin the record on this point surely did not support the viability of thecourt's scheme, for it consisted of the meager one-half of one percent rateof requests for blocking devices (albeit without the detailed notice andother requirements fashioned by the district court).
Pacifica upheld a time-channeling regulation of broadcast indecency thatwas more restrictive than the Section 505 scheme. It did not offer broadcastersthe alternative of blocking rather than time-channeling,5 and it directlyregulated a desired communication, rather than, as here, regulating a byproduct(signal bleed) of a communication between other parties in which the receivingnonsubscriber has no legitimate interest. Indeed, because the interest inprotection of children in this case is greater than that in Pacifica, itwould support stronger measures. Unlike the one-time broadcast of inappropriatelanguage at issue in Pacifica, this case involves channels that carry "virtually100% sexually explicit adult programming," App., infra, 42a, 47a, andwhich result, due to signal bleed, in "an unbroken continuum of sexuallyexplicit sounds and images, delivered without invitation to [children's]home[s]." Id. at 73a. Had the district court taken Pacifica and itsrationale into account, it would have upheld Section 505 because Section505 imposes a very limited restriction on speech and is a very effectiveapproach to the substantial evil it addresses. The court's application insteadof a very rigorous, least-restrictive-alternative test is consistent onlywith a form of scrutiny far more demanding than that which this Court hasapplied to indecency on the broadcast media. Because indecency on cabletelevision is constitutionally indistinguishable from indecency on thosemedia, the district court's use of that standard of review was erroneous.
B. The district court also erred in concluding, even under the exceptionallystrict standard of review it applied in this case, that Section 504 wouldbe less restrictive than Section 505 or that Section 504 would be sufficientto promote the interests underlying Section 505.
1. The court's analysis of the restrictions imposed by Section 505 was basedon its finding that "time channeling has proven to be the method ofcompliance of choice among" cable operators, because "no othersystem-wide blocking technique is economically feasible," App., infra,33a & n.23. See also id. at 16a-17a. In turn, the court reasoned, suchtime channeling "amounts to the removal of all sexually explicit programmingat issue during two thirds of the broadcast day from all households on acable system." Id. at 33a. Time channeling thus "diminishes Playboy'sopportunities to convey, and the opportunity of Playboy's viewers to receive,protected speech." Ibid.6
Based on the court's own factual findings, it is highly likely that an applicationof the court's hypothetical, enhanced version of Section 504 would haveat least the same effects. The court found that "the distribution oflockboxes to a sufficient number of customers to effectively control theproblem of signal bleed is not economically feasible." App., infra,21a. Specifically, the court found that, "[i]f one considers a fiveyear revenue stream in the break-even analysis, the number of traps thatcould be distributed rises to 6.0 percent of the subscriber base."Id. at 22a. In other words, if six percent of a system's subscribers optedto block signal bleed under an enhanced version of Section 504, then thecosts of supplying the traps would equal the operator's expected profitfrom carrying sexually explicit channels. Of course, cable operators couldbe expected to cease carrying sexually explicit channels long before theyreached that break-even point. As the court found, "profit-maximizingcable operators would cease carriage of adult channels * * * if costs roseto such a point that the profit from adult channels was less than the profitfrom channels unlikely to require blocking." Ibid.
Those findings make clear that any scheme that resulted in requests fortraps from even quite a small number of customers-fewer than six percentand perhaps as low as one to three percent-would make it uneconomical forcable operators to carry sexually explicit channels. The district court'senhanced version of Section 504 would, under its own rationale, be sucha scheme. The district court designed its enhanced version of Section 504to provide genuine, easily understandable notice to each subscriber of theproblem of signal bleed and a quick and easy means to stop it. App., infra,36a-37a. Moreover, such notice would have to be repeated on a regular basis(though the district court did not specify how often), and special noticewould have to be given whenever a cable operator changed the channel onwhich a sexually explicit programming service was carried. Id. at 37a. Ifsuch a system of notice and easily available blocking were in fact put intoeffect, the number of subscribers requesting blocking could be expectedto exceed the minimal number necessary to make carriage of the sexuallyexplicit channels uneconomical.
The result is that even a much enhanced version of Section 504 would likelylead to at least the same restriction of speech as does Section 505. Indeed,because time-channeling is not a part of the enhanced Section 504 schemeas envisioned by the district court, operators would simply cease to offerPlayboy's sexually explicit programming services. On the other hand, iftime-channeling too were offered to cable operators as a part of the hypotheticalenhanced Section 504 package, then the operators would surely choose thatoption, for precisely the same economic reasons as they have chosen timechanneling to comply with Section 505. Accordingly, the district court'senhanced version of Section 504 would be at least as restrictive of speechas Section 505, and it therefore is not a "less restrictive alternative."At the very least, the proposition that a fully effective notice requirementof the sort the district court posited would not result in time channelingto a comparable extent has not been demonstrated with the clarity necessaryto invalidate an Act of Congress on least-restrictive-means grounds.

2. The district court's hypothetical, enhanced version of Section 504 wouldnot in any event be a satisfactory alternative to Section 505, because itwould not adequately protect the compelling interests that the districtcourt itself recognized supported Section 505. Those interests are:
1) the Government's interest in the well-being of the nation's youth-theneed to protect children from exposure to patently offensive sex-relatedmaterial; 2) the Government's interest in supporting parental claims ofauthority in their own household-the need to protect parents' right to inculcatemorals and beliefs [i]n their children; and 3) the Government's interestin ensuring the individual's right to be left alone in the privacy of hisor her home-the need to protect households from unwanted communications.
App., infra, 26a-27a. See id. at 32a (concluding, after discussing eachof the above interests, "that § 505 addresses three interestswhich in sum can be labeled 'compelling'").7
This Court has carefully distinguished between the first and second of thoseinterests in the past, referring in Reno v. ACLU, both to "the State'sindependent interest in the well-being of its youth," as well as "theprinciple that 'the parents' claim to authority in their own household todirect the rearing of their chidren is basic in the structure of our society.'"521 U.S. at 865 (emphasis added) (quoting Ginsberg v. New York, 390 U.S.629, 639 (1968)). Our society has long recognized the authority of parentsto decide how to raise their children. See Prince v. Massachusetts, 321U.S. 158, 166 (1944). But it has also long been recognized that societyitself has an interest in the upbringing of youth, especially where parents,as a result of inertia or indifference or the competing claims of otherresponsibilities, fail to exercise their own authority.
In determining whether its hypothetical, enhanced version of Section 504would provide a less restrictive alternative to Section 505, the court entirelyignored society's independent interest in seeing to it that children arenot exposed to sexually explicit materials. The district court stated:
[W]ith adequate notice of the issue of signal bleed, parents can decidefor themselves whether it is a problem. Thus to any parent for whom signalbleed is a concern, § 504, along with 'adequate notice,' is an effectivesolution. In reality, § 504 would appear to be as effective as §505 for those concerned about signal bleed, while clearly less restrictiveof First Amendment rights.
App., infra, 37a-38a. We assume for purposes of discussion here that thecourt was correct in concluding that its enhanced version of Section 504would be sufficient to inform parents of the problem of signal bleed andto permit them to eliminate it easily and effectively. In that event, sucha regulation would arguably serve two of the interests identified by thedistrict court-the interests in "protect[ing] parents' right to inculcatemorals and beliefs [i]n their children" and "ensuring the individual'sright to be left alone in the privacy of his or her home." Id. at 26a.Under such an enhanced version of Section 504, parents who had strong feelingsabout the matter could certainly see to it that their children did not viewsignal bleed-at least in their own homes.
The district court's enhanced version of Section 504 would not, however,serve society's independent interest in protecting minors from exposureto indecent, sexually explicit materials, and the district court's reasoningtakes no account of that interest. Even an enhanced version of Section 504would succeed in blocking signal bleed only if parents affirmatively decidedto avail themselves of the means offered them to do so. There would certainlybe parents- perhaps a large number of parents-who out of inertia, indifference,or distraction, simply would take no action to block signal bleed, evenif fully informed of the problem and even if offered a relatively easy solution.8There also are children who would view signal bleed at the homes of friendswhose parents do not act (for whatever reason) under an enhanced Section504 to block signal bleed. See App., infra, 52a, 80a. Society has an interestindependent of the choices made by parents in seeing to it that childrenare not exposed to sexually explicit materials. Section 505 protects thatinterest, by ensuring that children are not exposed to signal bleed as aresult of inertia, indifference, or distraction; reliance on Section 504alone, by contrast, would disserve that interest, since children would beexposed to signal bleed of sexually explicit materials if parents did nottake affirmative steps to obtain blocking.
We are not referring here to that presumably very small number of childrenwhose parents affirmatively want their children to have the opportunityto watch sexually explicit programming. Even if we assume, arguendo, thatthe interests of those parents should prevail over the interests of societyin protecting children from indecent material (cf. Reno v. ACLU, 521 U.S.at 878 (reserving that question)), such parents' interests would be protectedequally well either by Section 505 (under which they would obtain accessto sexually explicit channels by subscribing to it9) or by a hypotheticalenhanced Section 504 (under which they would automatically receive the signalbleed). The children of parents who fail to act as a result of inertia,indifference, or distraction, however, would be protected only by Section505. The district court gave no weight whatsoever to society's interestin protecting those children when it ruled that a hypothetical enhancedversion of Section 504 would be an adequate alternative to Section 505.Accordingly, the district court's conclusion that such a version of Section504 would be a less restrictive alternative to Section 505 is mistaken,and its judgment that Section 505 is unconstitutional should be reversedfor that reason as well.
C. The district court's dismissal of the government's post-trial motionsalso was mistaken. The first notice of appeal, filed within the 20-day periodprescribed by Section 561(b) of the Act but after the post-trial motionswere filed, was effective to challenge the court's final judgment (as itwould not have been if Rule 4(a)(4) of the Federal Rules of Appellate Procedureapplied), but it did not deprive the district court of jurisdiction to considerthe government's motions relating to the terms of that judgment.
1. In an appeal to a court of appeals, the filing of a timely motion toalter or amend the judgment under Federal Rule of Civil Procedure 59(e)or the filing (not more than 10 days after entry of judgment) of a motionfor relief under Federal Rule of Civil Procedure 60(b) tolls the time withinwhich the notice of appeal must be filed. Fed. R. App. P. 4(a)(4)(A)(iv)and (vi). A notice of appeal filed before disposition of such a motion becomeseffective only when the order disposing of the last such motion is entered.Fed. R. App. P. 4(a)(4)(B)(i). The reason for this rule is that when sucha motion is filed, "the case lacks finality." 11 Charles AlanWright et al., Federal Practice and Procedure § 2821, at 220 (2d ed.1995).
This Court's rule governing certiorari (Sup. Ct. R. 13.3) is similar toRule 4(a)(4) in that it provides for tolling of the time for filing a certioraripetition while a petition for rehearing is pending in the court of appeals,but the Court's rule governing appeals (Sup. Ct. R. 18) does not addressthe consequences of filing a Rule 59(e) or 60(a) motion in the districtcourt. The time limits for filing a notice of appeal in such a case are"not free from doubt * * * because Rule 18.1 does not contain the statement,in former appeal Rule 11.3 (and in current certiorari Rule 13.4), that 'ifa petition for rehearing is timely filed by any party in the case, the timefor filing the notice of appeal for all parties * * * runs from the dateof the denial of rehearing or the entry of a subsequent judgment.'"Robert L. Stern et al, Supreme Court Practice § 7.2(c) at 388 (7thed. 1993). See also ibid. (noting that it is "most unlikely" thatthis Court meant to abandon that rule sub silentio). Based on simple cautionin this uncertain area of the law, we therefore decided to file a noticeof appeal within 20 days of entry of the injunction.10

2. Our filing of the first notice of appeal while the two post-trial motionswere pending before the district court did not deprive the district courtof jurisdiction to consider those motions. To begin with, Rule 60(a) itselfpermits a district court to correct clerical mistakes in a judgment whilean appeal is pending: "During the pendency of an appeal, such mistakesmay be so corrected before the appeal is docketed in the appellate court,and thereafter while the appeal is pending may be so corrected with leaveof the appellate court." On March 18, 1999, when the district courtdismissed the Rule 60(a) motion for lack of jurisdiction, this appeal hadnot yet been docketed in this Court. Accordingly, the district court hadjurisdiction to correct the mistake "just as if the case were stillpending in the district court." 11 Charles Alan Wright et al., FederalPractice and Procedure, supra, § 2856, at 251.
The filing of the notice of appeal also did not divest the district courtof jurisdiction to rule on the Rule 59(e) motion that was already pendingwhen the notice of appeal was filed. This Court's Rule 18.1, which governsthe commencement of appeals to this Court, is comparable to Rule 4 of theFederal Rules of Appellate Procedure, as it existed before 1979. Interpretingthe pre-1979 Rule 4, this Court explained in Griggs v. Provident ConsumerDiscount Co., 459 U.S. 56, 58-59 (1982) (per curiam), that while a districtcourt lacked jurisdiction to entertain a Rule 59(e) motion after a noticeof appeal had been filed, "if the timing was reversed-if the noticeof appeal was filed after the motion to vacate, alter, or amend the judgment-* * * the district court retained jurisdiction to decide the motion, butthe notice of appeal was nonetheless considered adequate for purposes ofbeginning the appeals process." The reason this "theoretical inconsistency"was permitted under the pre-1979 rule was that there was little danger thata court of appeals and a district court would be acting simultaneously onthe same judgment since a district court at that time did not automaticallynotify the court of appeals that a notice of appeal had been filed. Id.at 59.11
A direct appeal to this Court under Rule 18.1 functions similarly. Afterthe notice of appeal is filed, the appellant is given 60 days within whichto file its jurisdictional statement. Until the matter is docketed in thisCourt, there is no chance that the district court would be acting on a judgmentat the same time as this Court. Because the jurisdictional statement inthis case had not been filed at the time the district court dismissed theRule 59(e) motion, that dismissal was improper and should be reversed.12

3. The question whether the government's notice of appeal divested the districtcourt of jurisdiction is of substantial significance to the government andto other litigants in cases in which there is a right of direct appeal tothis Court. The parties in such cases often must determine how to preserveboth their right to appeal and their ability to seek postjudgment relieffrom the district court, which may alter the nature of the appeal to thisCourt or even render such an appeal unnecessary. Under the district court'sruling in this case, a litigant who wants to file a postjudgment motionmay do so only at the risk of forfeiting the litigant's right to appeal.Plenary consideration of the district court's ruling by this Court wouldadvance the interests of litigants, the district courts, and this Courtin orderly litigation of cases involving direct appeals to this Court.

CONCLUSION

This Court should note probable jurisdiction.
Respectfully submitted.











CHRISTOPHER J. WRIGHT
General Counsel
Federal Communications
Commission



SETH P. WAXMAN
Solicitor General
WILLIAM B. SCHULTZ
Acting Assistant Attorney
General
EDWIN S. KNEEDLER
Deputy Solicitor General
JAMES A. FELDMAN
Assistant to the Solicitor
General
JACOB M. LEWIS
EDWARD HIMMELFARB
Attorneys



APRIL 1999
1 The videotape shows a scene in which a man performs oral sex on a woman.The video images, while scrambled, are discernible. The entirely audibleaudio portion contains four-letter words and vulgar references to sexualorgans. DX 1.
2 It appears that Playboy has recently purchased Spice, which did not participatein the proceedings on remand from this Court and is no longer a party tothis case. Chicago Tribune, Mar. 16, 1999, 1999 WL 2853823.
3 Judge Farnan had entered a temporary restraining order on March 7, 1996,at the outset of this case, which remained in effect until this Court summarilyaffirmed the district court's denial of a preliminary injunction. 918 F.Supp. 813 (D. Del. 1996); see App., infra, 2a, 19a.
4 This period began on March 9, 1996, when the Telecommunications Act wentinto effect, and ended on May 18, 1997, when Section 505 was implementedafter the denial of a preliminary injunction was affirmed by this Court.App., infra, 19a.
5 Although the district court found that cable operators "with incompletescrambling technology" choose time-channeling, App., infra, 33a n.23,an increasing number of cable systems use digital or other technologiesthat eliminate signal bleed entirely. See id. at 9a, 18a n.17. With respectto subscribers to sexually explicit programming services on such systems,Section 505 imposes no restriction on speech whatever. Quite aside fromthe arguments in text, the district court had no basis for enjoining theapplication of Section 505 to such systems.
6 We do not dispute that time-channeling of indecent sexually explicit televisionprogramming to the hours when most viewers want to see such programmingis a restriction on such programming. The district court, however, failedto take into account the rather modest scope of that restriction-especiallyin light of the easy availability of VCR machines to tape television programmingand play it at a time that is convenient to the viewer. Cf. Pacifica, 438U.S. at 750 & n.28.
7 Although the district court ultimately accepted that sufficient evidencehad been introduced to establish each of the interests, it noted that itwas "troubled by the absence of evidence of harm presented both beforeCongress and before [the court] that the viewing of signal bleed of sexuallyexplicit programming causes harm to children." App., infra, 30a. Thedistrict court's concern was misplaced. The government need not introduceempirical evidence in each case that minors are harmed by exposure to indecent,sexually explicit material. Concerns about minors' exposure to such materialare based on commonly held moral views about the upbringing of childrenas well as empirical, scientific evidence. This Court has repeatedly held,over a period of many years and without referring to specific sociologicalor psychological data demonstrating harm, that society has a compellinginterest in protecting children from exposure to indecent, sexually explicitmaterials. See, e.g., Reno v. ACLU, 521 U.S. at 869 ("'[T]here is acompelling interest in protecting the physical and psychological well-beingof minors' which extend[s] to shielding them from indecent messages thatare not obscene by adult standards.") (quoting Sable, 492 U.S. at 126);Bethel Sch. Dist. No. 403 v. Fraser, 478 U.S. 675, 683-684 (1986); New Yorkv. Ferber, 458 U.S. 747, 756-757 (1982); Ginsberg v. New York, 390 U.S.629, 640-642 (1968). In the Denver Area case, the Court's unanimity on thispoint was particularly striking. See 518 U.S. at 743 (plurality opinion)("[T]he provision before us comes accompanied with an extremely importantjustification, one that this Court has often found compelling-the need toprotect children from exposure to patently offensive sex-related material.");id. at 779 (O'Connor, J., concurring in part and dissenting in part) (Regulationsat issue "serve an important governmental interest: the well-establishedcompelling interest of protecting children from exposure to indecent material.");id. at 806 (Kennedy, J., concurring in part, concurring in the judgmentin part, and dissenting in part) ("Congress does have * * * a compellinginterest in protecting children from indecent speech."); id. at 832(Thomas, J., concurring in the judgment in part and dissenting in part)("Congress has a 'compelling interest in protecting the physical andpsychological well-being of minors' and * * * its interest 'extends to shieldingminors from the influence of [indecent speech] that is not obscene by adultstandards.").
8 Studies have confirmed that sales of a good or service will be higherif consumers are required to take action to refuse it than if a mere failureto act is a refusal of the good or service. For example, telephone companiesoffering an "optional maintenance plan" for wires inside the subcriber'sresidence achieved a median subscription rate of 44% among 50 positive optionoffers (the subscriber must affirmatively request the plan) and a medianrate of 80.5% among 22 unilateral negative option offers. Similarly, Canadiancable programmers have reported that such "negative option" offersfor new channels resulted in 60%-70% subscription rates, far higher thanthe 25% rates resulting from standard (positive option) marketing methods.See Dennis D. Lamont, Negative Option Offers in Consumer Service Contracts:A Principled Reconciliation of Commerce and Consumer Protection, 42 UCLAL. Rev. 1315, 1330-1332 (1995). See also In re Columbia Broadcasting System,Inc., 72 F.T.C. 27, 337-338 (1967) (FTC action against record club) ("Inpractice, the Club's officials anticipate in advance that approximately35% of the members of its largest ('popular') division will not return thecard and hence will receive and accept the record selected for them by theClub."). Indeed, precisely because negative option sales give an unfairadvantage to the provider of a good or service, Congress expressly prohibitedcable operators from using negative option billing. See 47 U.S.C. 543(f)("A cable operator shall not charge a subscriber for any service orequipment that the subscriber has not affirmatively requested by name,"and the subscriber's "failure to refuse a cable operator's proposalto provide such service or equipment shall not be deemed to be an affirmativerequest for such service or equipment."); 47 C.F.R. 76.981 (FCC regulationprohibiting negative option billing). See also 16 C.F.R. 425.1 (FTC regulationregarding negative option plans).
9 We leave out of the analysis altogether those parents or other individualswho want signal bleed because they would like to receive sexually explicitmaterials broadcast by Playboy but do not want to pay for it. Such individualshave no cognizable interest in receiving signal bleed of a channel to whichthey do not subscribe.
10 In FCC v. League of Women Voters, 468 U.S. 364, 373 n.10 (1984), theCourt held that under former Rule 11.3, a direct appeal taken during thependency of a Rule 59 motion was permissible since the motion did not seekalteration of the rights adjudicated in the original judgment. See FTC v.Minneapolis-Honeywell Regulator Co., 344 U.S. 206, 212 (1952) ("Thetest is a practical one. The question is whether the lower court, in itssecond order, has disturbed or revised legal rights and obligations which,by its prior judgment, had been plainly and properly settled with finality.").In this case, the post-trial motions arguably did not seek to alter therights adjudicated. The Rule 59(e) motion here asked the district courtto limit the injunction to Playboy and thus would not have affected Playboy'srights. The Rule 60(a) motion asked the district court to include in itsinjunction what the court in its underlying decision announced it was requiring-thatPlayboy must ensure in its contractual arrangements that cable operatorsprovide "adequate notice" of the availability of free lockboxes.
11 As the Court explained in Griggs, the 1979 amendments to Rule 4 alteredthe situation by making it clear that the court of appeals had no jurisdictionso long as a motion to vacate, alter, or amend the judgment was pendingin the district court. 459 U.S. at 59-60. This in turn created a trap forthe would-be appellant who failed to file a second notice of appeal afterthe disposition of the post-trial motion. Accordingly, Rule 4 was modifiedagain in 1993 to provide that a notice of appeal filed after judgment butbefore the disposition of a posttrial motion "becomes effective toappeal a judgment or order * * * when the order disposing of the last suchremaining motion is entered." Fed. R. App. P. 4(a)(4)(B)(i).
12 Alternatively, if the filing of the Rule 59(e) motion tolled the timeto file the first notice of appeal under both Section 561(b) of the Actand 28 U.S.C. 1253, and if it is concluded that the Rule 59(e) motion "actuallyseeks an 'alteration of the rights adjudicated' in the court's first judgment,"FCC v. League of Women Voters, 468 U.S. at 373 n.10 (quoting Departmentof Banking v. Pink, 317 U.S. 264, 266 (1942)), then the first notice ofappeal may have been ineffective, at least insofar as the government soughtto challenge the injunction as a final judgment. An ineffective notice ofappeal would not divest the district court of jurisdiction. In that event,it should be noted that the second notice of appeal would remain sufficientto bring this case properly before this Court.

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