TCG Detroit v. City of Dearborn

• Decision Date: 05 November 1999
• Docket Number: PLAINTIFF-APPELLANT,98-2035,THIRD-PARTY,DEFENDANT-APPELLEE,Nos. 98-2034,s. 98-2034
• Citation: 206 F.3d 618
• Parties: (6th Cir. 2000) TCG DETROIT,(98-2034), PLAINTIFF (98-2035), V. CITY OF DEARBORN,(98-2034),THIRD-PARTY(98-2035), AMERITECH MICHIGAN, INCORPORATED, THIRD-PARTY(98-2035). Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 618

206 F.3d 618 (6th Cir. 2000)

TCG DETROIT, PLAINTIFF-APPELLANT (98-2034), PLAINTIFF (98-2035),

V.

CITY OF DEARBORN, DEFENDANT-APPELLEE (98-2034),THIRD-PARTY PLAINTIFF-APPELLANT (98-2035), AMERITECH MICHIGAN, INCORPORATED, THIRD-PARTY DEFENDANT-APPELLEE (98-2035).

Nos. 98-2034, 98-2035

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: November 5, 1999

Decided and Filed: March 7, 2000

Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 96-74338--Lawrence P. Zatkoff, Chief District Judge.

David F. Graham (argued), Sidley & Austin, Chicago, IL, for TCG Detroit.

William Malone (argued and briefed), Miller & Van Eaton, Washington, D.C., Debra C. Walling (briefed), Dearborn, MI, for City of Dearborn.

Joseph A. Fink (argued and briefed), John M. Dempsey (briefed), Dickinson, Wright, Moon, Van Dusen & Freeman, Lansing, MI, Michael A. Holmes (briefed), Detroit, MI, for Ameritech Michigan, Inc.

Charles H. Polzin (briefed), Hill, Lewis, Adams, Goodrich & Tait, Birmingham, MI, Roderick S. Coy (briefed), Clark Hill, Okemos, MI, Richard C. Marsh (briefed), Clark Hill, Detroit, MI, for TCG Detroit.

David E. Marvin (briefed), Fraser, Trebilcock, Davis & Foster, Lansing, MI, Gary L. Field (briefed), Harvey J. Messing (briefed), James A. Ault (briefed), Loomis, Ewert, Parsley, Davis & Gotting, Lansing, MI, Michael J. Lichtenstein (briefed), Swidler, Berlin, Shereff & Freidman, Washington, D.C., David A. Handzo (briefed), Deanne E. Maynard (briefed), Jenner & Block, Washington, DC, for Amici Curiae.

Before: Guy and Boggs, Circuit Judges; and Hood, District Judge.^*

BOGGS, J., delivered the opinion of the court, in which HOOD, D. J., joined. GUY, J. (p. 626), delivered a separate opinion concurring in part and dissenting in part.

OPINION

Boggs, Circuit Judge

TCG Detroit ("TCG"), a telecommunications provider, appeals the district court's grant of summary judgment to the City of Dearborn ("the City") on the issue of whether the City's requirement that TCG pay the City a certain franchise fee for the privilege of laying fibre-optic telecommunications cable within its limits, pursuant to a city ordinance, violates the Federal Telecommunications Act of 1996 ("the Act"), 47 U.S.C. § 253. TCG had also alleged that the City's requirement constituted a violation of 42 U.S.C. § 1983. The district court had earlier dismissed without prejudice TCG's state claim, which had alleged a violation of the Michigan Telecommunications Act of 1995, invoking 28 U.S.C. § 1367(c). It adhered to that ruling, refusing to reinstate that claim "based on a concern of jury confusion over the differing standards applicable to the federal and state claims." TCG Detroit v. City of Dearborn, 977 F. Supp. 836, 841 (E.D. Mich. 1997).

In the course of its dispute with TCG, the City also demanded a franchise fee from an existing provider, Ameritech Michigan ("Ameritech"), resulting in a suit which has been consolidated with TCG's case. The City claimed that the Act gave it authority to charge such a fee. The district court granted summary judgment to Ameritech on the grounds that the Michigan law under which Ameritech was incorporated, and its original franchise granted, prohibits the local imposition of franchise fees on providers who had already been granted a franchise by the State of Michigan. The City appeals.

I.

In 1994, TCG made an agreement with Detroit Edison to lay fibre-optic telecommunications cable in the latter's existing electrical conduit rights-of-way. The cable was to be owned by Detroit Edison and in part leased back to TCG for its use in providing telecommunications services. TCG had laid almost eight miles of a proposed total of twenty-seven miles of cable when the City, advised of the agreement by Detroit Edison, objected and demanded a franchise fee before work could proceed further.

TCG and the City began negotiations (during which the City passed an ordinance authorizing it to collect the fees in question) and, by June 29, 1995, had reached a tentative agreement, memorialized in the City's proposal of that date to TCG. This provided for the payment by TCG of 4% of its gross revenues, on top of a $50,000 one-time fee and up to $2,500 in reimbursement of the City's administrative costs. TCG's regional counsel accepted this proposal in principle, suggesting amendments (among them, a provision that any agreement would be modified to reflect future changes in federal and state laws), in a letter dated September 22, 1995.

Meanwhile, legislation that would become the Act was introduced in Congress in May 1995. The Act was passed in 1996, to become effective in February 1998. Believing that this legislation foreclosed the City's right to require the franchise fee, TCG backed away from the agreement as it had stood, and in a series of letters to the City between January and March 1996 attempted to obtain a permit without payment of the fees previously discussed. Continuing talks with the City failed to resolve the issue, whereupon TCG brought suit in September 1996.

In addition to alleging that the City was violating the Act, TCG alleged discrimination against it and in favor of Ameritech, which was not being required to pay any franchise fee. Thereupon, the City demanded a fee of Ameritech, which refused, prompting the City to implead it as a third-party defendant.

On cross motions for summary judgment by all parties, the City prevailed against TCG, the district court ruling that a fair and reasonable franchise fee was permitted by the Act and that TCG's near-agreement on the terms demanded showed that TCG itself had considered the City's proposed fees "reasonable." Ameritech, however, convinced the district court that state law, under which Ameritech's predecessor, Michigan State Telephone Company, had first negotiated its franchise in 1904, precluded any local authority from altering the franchise's terms. The City had argued, unsuccessfully, that the 1908 amendments to Michigan's constitution, expanding municipal authority over rights-of-way, could be applied to a pre-existing chartered company.

The district court noted that the case is one of first impression in this Circuit, this court never having had occasion to consider the implications of the Act's "fair and reasonable compensation" provision. Since the district court's ruling, this court has had occasion to consider a case in which the Act is, at least in part, implicated. See Michigan Bell Tel. Co. v. Climax Tel. Co., 186 F.3d 726 (6th Cir. 1999), amended, 202 F.3d 862 (6th Cir. Jan. 18, 2000). However, the instant case requires us for the first time to construe § 253 of the Act. We hold that the district court correctly construed § 253, and did not err in its other rulings.

II.

The immediately relevant subsections of the pertinent section of the Act are:

§ 253. Removal of barriers to entry

(a) In general

No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.

(b) State regulatory authority

Nothing in this section shall affect the ability of a State to impose, on a competitively neutral basis and consistent with section 254 of this section, requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.

(c) State and local government authority

Nothing in this section affects the authority of a State or local government to manage the public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by such government.

(d) Preemption

If, after notice and an opportunity for public comment, the Commission determines that a State or local government has permitted or imposed any statute, regulation, or legal requirement that violates subsection (a) or (b) of this section, the Commission shall preempt the enforcement of such statute, regulation, or legal requirement to the extent necessary to correct such violation or inconsistency.

47 U.S.C. § 253(a)-(d).

Before considering the issues presented in this case, however, this court must be assured that it has jurisdiction. The district court raised the question of whether TCG has standing to sue under the Act, and held that § 253 implies a private right of action for those claiming barrier-to-entry injury. See TCG Detroit v. City of Dearborn, 977 F. Supp. at 839. But other district courts have held otherwise. See, e.g., GST Tucson Lightwave, Inc. v. City of Tucson, 950 F. Supp. 968, 970-71 (D. Ariz. 1996) (holding no private right of action, express or implied, for § 253 injuries); accord AT&T Communications v. Austin, Tex., 975 F. Supp. 928, 936 (W.D. Tex. 1997).¹

Although the City does not contest as error the district court's holding that § 253 confers an implied private right of action, it is incumbent on us to address this issue, since the question of TCG's standing implicates the United States Constitution's Article III case-or-controversy requirement, which must be satisfied for a federal court to hear the case. See Juidice v. Vail, 430 U.S. 327, 331-32 (1977) ("Although raised by neither of the parties, we are first required to examine the standing of appellees, as a matter of the case-or-controversy requirement associated with Article III . . . ."). If this requirement of Article III is not satisfied, jurisdiction is lacking. See In re GF Corp., Nos. 92-3583, 92-3585, 1993 WL 239062, at *2 (6th Cir. June 30, 1993) (unpublished opinion). Where jurisdiction is lacking, the court must on its own motion dismiss the case. Fed. R. Civ. P....