Time Warner Entertainment v. Atriums Partners

• Decision Date: 26 November 2002
• Docket Number: Civil Action No. 02-2343-CM.
• Citation: 232 F.Supp.2d 1257
• Parties: TIME WARNER ENTERTAINMENT COMPANY, L.P. and Liberty Cable of Missouri, Inc., Plaintiffs, v. ATRIUMS PARTNERS, L.P., Defendant, Everest Midwest Licensee, LLC, d/b/a Everest Connections, Intervenor.
• Court: U.S. District Court — District of Kansas

232 F.Supp.2d 1257

TIME WARNER ENTERTAINMENT COMPANY, L.P. and Liberty Cable of Missouri, Inc., Plaintiffs, v. ATRIUMS PARTNERS, L.P., Defendant Everest Midwest Licensee, LLC, d/b/a Everest Connections, Intervenor.

Civil Action No. 02-2343-CM.

United States District Court, D. Kansas.

November 26, 2002.

Bernard J. Rhodes, Lathrop & Gage L.C., Kansas City, MO, for Plaintiffs.

Lee M. Smithyman, James P. Zakoura, David J. Roberts, Smithyman & Zakoura, Chtd., Overland Park, KS, for Defendants.

Rachel L. Reiber, Kansas City, MO, for Intervenor.

MEMORANDUM AND ORDER

MURGUIA, District Judge.

On July 22, 2002, plaintiffs filed a Verified Complaint for Declaratory and Injunctive Relief and a Motion for Temporary Restraining Order and/or Preliminary Injunction (Doc. 2). On September 24, 2002, Everest Midwest Licensee, L.L.C. (Everest) filed a Motion to Intervene (Doc. 19). On October 2, 2002, plaintiffs filed a First Amended Verified Compliant for Declaratory and Injunctive Relief (Doc. 23). That same day, defendant Atrium Partners, L.P. (Atriums Partners) filed an Answer and Counterclaim of Atrium Partners, L.P. to First Amended Verified Complaint for Declaratory and Injunctive Relief (Doc. 25).

On October 3, 2002, the court held a hearing on the motion for temporary restraining order. At that hearing, the parties presented evidence and agreed to consolidate the hearing with a trial on the merits. The court hereby disposes of this case as follows.

• Background

• Parties

Plaintiffs currently do business in the greater Kansas City area under the name Time Warner Cable (Time Warner).¹ Time Warner is a franchised cable television operator that operates a cable television system. Atrium Partners owns "The Atriums," a 206-unit, six-story retirement complex in Overland Park, Kansas. Everest is a facilities-based broadband provider of telecommunications, cable, and high speed internet services via cable modem.

• The Agreement

In 1987, Joseph Tutera, as agent for Atrium Partners, contacted TeleCable of Overland Park, Inc.² (TeleCable) about the possible provision of cable television services at the Atriums. James Pirner, general manager of TeleCable at the time, forwarded to Mr. Tutera the "standard license agreement" TeleCable used to provide cable television services to apartment buildings. Mr. Tutera returned the executed license agreement (Agreement) to Mr. Pirner without change.

The Agreement states that "TeleCable desires to install, operate and maintain its cable, junction boxes, and other facilities incidental or related to the provision of its services to tenants in the Project ("the facilities") in order to serve those tenants of Owner who shall from time to time pay Telecable for its services." The Agreement granted to TeleCable "the right, license and permission to install, operate and maintain such of the facilities as TeleCable deems necessary or desirable in or on Owner's property and in the Project in order to provide CATV and Pay TV services to tenants in the Project." Other relevant provisions state that "the facilities installed by TeleCable in the Project or elsewhere on Owner's property shall be and remain the sole and exclusive property of TeleCable and shall be treated as personal property of TeleCable for all purposes," and that "[t]he license herein granted shall remain in effect and may not be terminated by Owner unless and until the Project is destroyed or demolished." Finally, the Agreement states, "Owner reserves the right to grant other licenses or easements which do not interfere with TeleCable's rights under this license."³

• The Facilities

After the Agreement was executed, Time Warner installed cable wiring at the Atriums. The cable wiring inside the Atriums can be broken down into three parts. The first part, called the "riser," consists of a single large cable that comes from outside the building, and then "rises" up through the floor of each of the six stories. Within the utility closet on each floor is a junction box, to which the riser is connected. The junction box divides the signal from the riser into separate connectors for each individual apartment.

The second part of the wiring is called the "home run wiring." The home run wiring begins at the junction box, where the individual wiring for each apartment begins. Specifically, the home run wiring is the dedicated wires that go from the junction box to a point at (or about) twelve inches outside where the cable enters the individual apartments. The home run wiring travels through ceiling soffits above the hallways encircling each floor. The twelve-inch point outside the individual apartments is called the "demarcation point."

The third part of the cable wiring, called "home wiring," begins at the demarcation point, i.e., in the ceiling soffit twelve inches outside the individual apartments, and continues through the wall of the apartment, ending at the cable outlet mounted on the inside wall(s) of the apartment. The demarcation point may or may not be reflected by a mechanical connection. In other words, the home run wires may go directly from the junction box to the individual cable outlet wall plates without any junction or connection.

• The Dispute

On June 26, 2002, Atrium Partners made a written demand on Time Warner, purporting to invoke its rights under the Federal Communications Commission (FCC) regulation 47 C.F.R. § 76.804(b) (FCC Home Run Wiring Regulations), which provides:

Where an MVPD⁴ owns the home run wiring in an MDU⁵ and does not (or will not at the conclusion of the notice period) have a legally enforceable right to maintain any particular home run wire dedicated to a particular unit on the premises against the MDU owner's⁶ wishes, the MDU owner may permit multiple MVPDs to compete for the right to use the individual home run wires dedicated to each unit in the MDU. The MDU owner must provide at least 60 days' written notice to the incumbent MVPD of the MDU owner's intention to invoke this procedure. The incumbent MVPD will then have 30 days to provide a single written election to the MDU owner as to whether, for each and every one of its home run wires dedicated to a subscriber who chooses an alternative provider's service, the MVPD will: remove the wire and restore the MDU building consistent with state law; abandon the wiring without disabling it; or sell the wiring to the MDU owner.

47 C.F.R. § 76.804(b) (footnotes added). In the letter, Atrium Partners demanded that Time Warner Cable elect to either abandon, remove, or sell the home run wiring in the Atriums.

The precise issue to be determined by this court is whether the provisions of § 76.804(b) apply to the home run wiring installed by Time Warner in the Atriums. Time Warner argues that § 76.804(b) does not apply because it has a legally enforceable right to continue to provide cable service to the tenants of the Atriums. Atriums Partners and Everest, on the other hand, contend that § 76.804(b) does apply and that, as a result, Time Warner must either abandon, remove, or sell to Atrium Partners the home run wiring it installed. In essence, Atrium Partners seek to bring competition for telecommunications and cable services to its individual residents without forcing the new entrant (Everest) to install a complete new set of home run wiring. For clarification, the court notes that the only wiring at issue in this case is the home run wiring-that wiring which runs from the junction box to the demarcation point.

• FCC Regulations

The FCC promulgated the Home Run Wiring Regulations to establish procedures regarding the disposition of MDU home run wiring upon MDU tenants' termination of service. See Report and Order and Second Further Notice of Proposed Rulemaking in the Matter of Telecommunications Services Inside Wiring, 1997 WL 644031, 13 F.C.C.R. 3659, 13 FCC Red. 3659, CS Docket No. 95-184, MM Docket No. 92-260, FCC No. 97-376 (October 17, 1997) (FCC Report). The FCC noted that MDU owners often object to the installation of multiple home run wires in the hallways of their properties (due to aesthetics, space limitations, disruptions, inconvenience, potential property damage) and that, as a result, MDU residents are often denied the ability to choose among competing service providers. Id. ¶¶ 35, 36.

The FCC determined that establishing such procedures "is a necessary, `appropriate, and reasonable' method to fulfill Section 623's mandate of reasonable cable rates." Id. ¶ 88. The FCC further commented that the inability of MDU owners to use existing home run wiring "deters consideration of alternative providers" and that the home run wiring rules provide "a reasonable means of increasing choice and promoting competition." Id. ¶ 91. Accordingly, the FCC Home Run Wiring Regulations were promulgated, providing in essence that, when an individual subscriber voluntarily terminates cable service, the MDU owner has the right to purchase the cable home wiring for use by competing service providers, subject only to an enforceable legal right of the incumbent provider to maintain its home run wiring.

• Discussion

• Recent Caselaw

After the October 3rd hearing in this case, the Southern District of New York rendered an opinion in a case captioned CSC Holdings, Inc. v. Westchester Terrace at Crisfield Condominium, et al., 2002 WL 31798940, No. 01-8134 (S.D.N.Y. Oct. 21, 2002). Time Warner provided the court with a copy of the opinion, and Atrium Partners submitted a brief response to the opinion. Even though the opinion in CSC Holdings is not binding on this court, the court deems it appropriate to address the conclusions set forth in CSC Holdings.

The posture of CSC Holdings is similar to the case at hand. In CSC Holdings, the owner of a 60-unit condominium complex (an MDU owner) had entered into an agreement with CSC Holdings (CSC) (the incumbent MVPD), granting to CSC the "the non-exclusive right to provide telecommunications services to the...