Consolidated Television Cable Service, Inc. v. City of Frankfort, Ky.
| Citation | 857 F.2d 354 |
| Decision Date | 21 September 1988 |
| Docket Number | No. 87-5539,87-5539 |
| Parties | 1988-2 Trade Cases 68,239 CONSOLIDATED TELEVISION CABLE SERVICE, INC., Plaintiff-Appellant, v. The CITY OF FRANKFORT, KENTUCKY; Electric and Water Plant Board of the City of Frankfort, Kentucky; and Community Service, Inc., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Raymond G. Smith, argued, Louisville, Ky., Edward H. Stopher, for plaintiff-appellant.
Sheryl G. Snyder, argued, Wyatt, Tarrant and Combs, Louisville, Ky., Virginia H. Snell, William H. Hollander, Charles L. Hobson, argued, Frankfort, Ky., for defendants-appellees.
Before KRUPANSKY and WELLFORD, Circuit Judges, and GILMORE, District Judge. *
In this action, plaintiff Consolidated Television Cable Service, Inc. (Consolidated), a private for-profit corporation engaged in the business of providing cable television (CATV) service for the City of Frankfort, Kentucky, alleges that defendants, The City of Frankfort (City), Electric and Water Plant Board of the City of Frankfort, Kentucky, (Board), and Community Service, Inc. (Community), have violated the Federal Anti-Trust Laws and 42 U.S.C. Sec. 1983. The antitrust claim is essentially that defendants have unlawfully conspired to prevent free competition between Consolidated and Community, and have conspired to and have created an unlawful monopoly for the provision of CATV services. The Sec. 1983 claim alleges numerous civil rights violations, including denial of due process and infringement of First Amendment Rights.
Community is a nonprofit, nonstock corporation that also provides CATV service in Frankfort. In fact, since the early 1950's, Consolidated, or its predecessors, and Community have both serviced Frankfort. Since its inception, however, Community has had a special relationship with the City and the Board. Consolidated has long desired to be placed on an equal footing with Community.
This is actually the seventh lawsuit brought by Consolidated since 1960 in connection with the provision of CATV services in Frankfort, and the second time the dispute has been before this Court. 1
The district court granted summary judgment for defendants, dismissing the action, and holding that: 1) Consolidated's claim under 42 U.S.C. Sec. 1983 is res judicata; 2) prior litigation estops Consolidated from arguing that Community is not an agency of the City and the Board, and the record reveals that Community is a de facto agency; and 3) defendants are immune from the antitrust claims under the state action exemption of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943).
The district court summarized the pertinent facts as follows:
When television became popular in the late 1940's, Frankfort, due to its topography and geography, was at a disadvantage in obtaining adequate reception of television broadcasts. In an effort to remedy Frankfort's inability to receive broadcasts on home antennae, the City and the Board consulted with Radio Corporation of America (RCA). RCA perfected a method by which multiple signals could be received through a single high antenna and distributed to homes by means of a coaxial cable. The Board created a non-profit, non-stock corporation, known as Community Service, Inc., to operate the new system that RCA had invented and which was owned by the City.
The Board and Community entered into a contract in August of 1952. This contract was to run for one year and permitted Community's use of the Board's existing equipment as well as any extensions the Board might need to build in order to supply television service. No consideration was given but the contract provided for Community to reimburse the Board for any costs expended in construction. The title to all units constructed was vested in the Board.
In September of 1955 a new contract was entered into between the Board and Community. This contract was to run for 10 years and permitted Community to operate the CATV system in the City. The entire televisiom system was leased to the corporation. The contract further provided that Community was to remain a non-profit corporation with all sums realized going to charity. The consideration for rental of the system was to be $1.00 per year.
By 1958 almost all the valley section of Frankfort was being served, except two fairly large areas in east and north Frankfort. Community had not extended this system to these areas for financial reasons. In 1958 plaintiff requested and in 1959 was granted a contract by the Board. This contract permitted Consolidated to construct a coaxial cable system for the unserviced areas of the city. It also permitted plaintiff to use city-owned utility poles in those areas.
By 1960 Consolidated had expanded as far as it could under its contract with the Board. It requested permission to extend its cable system into the same areas then being served by Community. The Board denied Consolidated's request to expand its pole attachments. As a consequence, plaintiff brought the first of the lawsuits which preceeded the present suit.
The contracts between plaintiff and defendant Board, and Community and Board, expired in 1965. Both parties were permitted to operate their cable systems in Frankfort without a contract for about 18 months. In 1967 Community was given a new contract but Consolidated was not. Community's new contract was for a period of five and one-half years and allowed Community to use all poles owned by the local telephone company and the plant board for $1.00 per year. One provision of this contract required Community to allow the Board chairman to nominate three members to Community's board of directors. In 1978, the defendant Board and Community entered into another contract which was to extend for 10 years the prior supplemental contract of March 1971.
In 1976, Consolidated again requested permission to expand its cable system. This time defendants refused to permit them to do so allegedly because plaintiff was suing defendants.
In 1982 Consolidated again requested permission to expand its pole attachments throughout the City of Frankfort. The defendants, City, Community, and Plant Board, again denied Consolidated's request. That denial led to the present suit.
With reference to the Sec. 1983 claim, the district court held that it was barred by collateral estoppel, if not by res judicata. We affirm on grounds of res judicata rather than on grounds of collateral estoppel.
Consolidated has had only one contract with the Board, which lasted from 1959 to 1965, and which was never renewed or extended. That contract gave Consolidated the right to use poles owned by the Board to erect its CATV system to service only that portion of the City known as East Frankfort. In 1960, Consolidated wanted to expand farther, but its request for a contract to allow it to use poles in other areas of the City that were being serviced by Community was turned down. Consolidated then filed suit in state court alleging that, by allowing Community to use all of the Board's poles in the City and denying the same right to Consolidated, the Board had acted in an arbitrary, capricious, and discriminatory manner. Eventually, the Court of Appeals of Kentucky 2 affirmed the dismissal of the action by the trial court, stating in pertinent part:
Under the facts recited, and the principles of law applicable thereto, we believe the Board's refusal to grant appellant the right to use its poles did not necessarily result in unconstitutional discrimination ...
Consolidated Television Service, Inc. v. Leary, 382 S.W.2d 78, 81 (Ky.1964).
In 1971, an agreement was entered into by Community and the Board to allow Community to extend its operations into East Frankfort, where previously Consolidated had operated exclusively, and to use poles owned by the Board. This precipitated a suit in the United States District Court for the Eastern District of Kentucky by Consolidated against the Board, the City, and Community, alleging unconstitutional impairment of contract, and violation of the due process and equal protection clauses of the Fourteenth Amendment. The action sought injunctive relief.
The district court dismissed the complaint, and this Court affirmed, stating: "[W]e agree with Judge Moynahan that the City's operation of its own CATV system does not violate any rights of Consolidated protected by the Constitution of the United States." Consolidated Television Cable Service, Inc. v. City of Frankfort, 465 F.2d 1190, 1193 (6th Cir.1972).
In the present action, Consolidated alleges that defendants denied Consolidated access to telephone poles so as to prevent it from offering cable television service in Frankfort, in violation of 42 U.S.C. Sec. 1983, and the First, Fifth, and Fourteenth Amendments to the United States Constitution. The suit was filed in 1982, prompted by defendants' refusal to grant Consolidated's request for permission to expand its pole attachments throughout the City. According to Consolidated, a similar request had been rejected in the late 1970's on the grounds that defendants would not grant a contract to Consolidated in light of the ongoing litigation between the parties. Thus, Consolidated repeated its request in 1982, once all pending litigation was resolved.
The preclusive effect of a prior state court judgment is determined by looking to the law of that state. Kremer v. Chemical Construction Corp., 456 U.S. 461, 102 S.Ct. 1883, 72 L.Ed.2d 262 (1982). Similarly, the scope of a prior federal court judgment is governed by federal law. Cemer v. Marathon Oil Co., 583 F.2d 830 (6th Cir.1978). However, Kentucky courts and this Circuit define the doctrine of res judicata, also known as claim preclusion, essentially the same. Kentucky courts will find an action res judicata under the following circumstances:
First, there must be identity of parties. Second, there must be identity of the two causes of...
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