BellSouth Corp. v. US

• Citation: 868 F. Supp. 1335
• Decision Date: 23 September 1994
• Docket Number: No. CV 93-B-2661-S.,CV 93-B-2661-S.
• Parties: BELLSOUTH CORPORATION, Bellsouth Telecommunications, Inc., d/b/a South Central Bell Telephone Company and Southern Bell Telephone and Telegraph Co., and Bellsouth Interactive Media Services, Inc., Plaintiffs, v. UNITED STATES of America, Federal Communications Commission, and Janet Reno, in her official capacity as Attorney General of the United States of America, Defendants.
• Court: U.S. District Court — Northern District of Alabama

868 F. Supp. 1335

BELLSOUTH CORPORATION, Bellsouth Telecommunications, Inc., d/b/a South Central Bell Telephone Company and Southern Bell Telephone and Telegraph Co., and Bellsouth Interactive Media Services, Inc., Plaintiffs, v. UNITED STATES of America, Federal Communications Commission, and Janet Reno, in her official capacity as Attorney General of the United States of America, Defendants.

No. CV 93-B-2661-S.

United States District Court, N.D. Alabama, Southern Division.

September 23, 1994.

COPYRIGHT MATERIAL OMITTED

Atley A. Kitchings, Jr., Will M. Booker, Lange Simpson Robinson & Somerville, Birmingham, AL, Roger M. Flynt, Jr., Fred A. Walters, Bellsouth Telecommunications Inc., Atlanta, GA, Michael W. McConnell, Kenneth S. Geller, H. Thomas Byron, III, Mayer Brown & Platt, Washington, DC, Walter H. Alford, John F. Beasley, William B. Barfield, Thompson T. Rawls, II, Bellsouth Corp., Atlanta, GA, for Bellsouth Corp., Bellsouth Telecommunications, Inc. d/b/a South Central Bell Telephone Co. and Southern Bell Telephone and Telegraph Co., Bellsouth Interactive Media Services Inc.

Herbert J. Lewis, III, Walter Braswell, Acting U.S. Atty., Birmingham, AL, Frank W. Hunger, Theodore C. Hirt, Alina S. Kofsky, U.S. Dept. of Justice—Civil Div., Washington, DC, for U.S.

Herbert J. Lewis, III, Walter Braswell, Acting U.S. Atty., Birmingham, AL, Frank W. Hunger, U.S. Dept. of Justice — Civil Div., Washington, DC, for F.C.C., Janet Reno.

Joe R. Whatley, Jr., Cooper Mitch Crawford Kuykendall & Whatley, Birmingham, AL, for Georgia Cable Television Ass'n, Tennessee Cable Television Ass'n, amici.

Edward J. Ashton, Amsouth Bank Legal Dept., Birmingham, AL, James L. Gattuso, Washington, DC, Mark R. Paoletta, O'Connor & Hannah, Washington, DC, for Citizens for a Sound Economy Foundation, amicus.

Catherine Wang, Gene DeJordy, Swidler & Berlin, Washington, DC, for ADC Telecommunications, Inc., amicus.

MEMORANDUM OPINION

BLACKBURN, District Judge.

This case involves a challenge to certain provisions of the Cable Communications Policy Act of 1984, 47 U.S.C. § 521-559 (1988 & Supp. IV 1992). Plaintiffs, BellSouth Corporation, BellSouth Telecommunications, Inc., and BellSouth Interactive Media Services, Inc., allege that subsections (1) and (2) of 47 U.S.C. § 533(b)¹ violate the Free Speech Clause of the First Amendment and the equal protection guarantee embodied in the Due Process Clause of the Fifth Amendment. Defendants are the Federal Communications Commission, the United States of America, and Attorney General Janet Reno, in her official capacity.²

After plaintiffs and defendants completed discovery, plaintiffs moved for summary judgment and defendants moved for judgment on the pleadings or, in the alternative, for summary judgment. For the reasons stated in this memorandum, the court has determined that plaintiffs' Motion for Summary Judgment is due to be granted and defendants' Motion for Summary Judgment is due to be denied.

BACKGROUND

BellSouth Corporation is a holding company which owns BellSouth Telecommunications, Inc. ("BST"). BST provides local and intraLATA³ telephone service in nine states.⁴ BellSouth Corporation also owns BellSouth Interactive Media Services, Inc., a corporation formed for the purpose of providing video programming and related services. BellSouth's Evidentiary Appendix 1 hereinafter BellSouth's App. 1, Tab C, Affidavit of William F. Reddersen, ¶ 1.

Under § 533(b), plaintiffs and their affiliates cannot provide video programming⁵ directly to their telephone subscribers within the nine-state area served by BST. Plaintiffs are allowed by the terms of § 533(b), however, to provide video programming outside their telephone service area. It is the restriction on providing video programming to their own subscribers within the BST nine-state service area which is before the court for constitutional analysis.

In deciding this question, this court must, based on numerous Supreme Court decisions on First Amendment issues, determine that there is in fact prohibited speech of some kind, determine the appropriate level of judicial scrutiny, and then determine whether the statute passes constitutional muster under that level of scrutiny.

There can be no disagreement that § 533(b) is a prohibition on speech protected by the First Amendment. See Turner Broadcasting, ___ U.S. at ___, 114 S.Ct. at 2456.

Without restating all of the case law on First Amendment issues, most of which is recited in the recent Supreme Court case of Turner Broadcasting, there are three levels of scrutiny that might apply in assessing the constitutionality of § 533(b):

(1) strict scrutiny, which applies to a content-based or speaker-specific ban;

(2) intermediate scrutiny, which applies to a content-neutral ban; or

(3) rational basis scrutiny, which applies to an incidental ban on speech.

DISCUSSION

Plaintiffs contend that the effect of § 533(b) is to deny them a fundamental right under the First Amendment. They argue that under an analysis of either strict or intermediate scrutiny, the statute must be stricken.

Relying on F.C.C. v. National Citizens Commission for Broadcasting, 436 U.S. 775, 98 S.Ct. 2096, 56 L.Ed.2d 697 (1978), and Associated Press v. United States, 326 U.S. 1, 65 S.Ct. 1416, 89 L.Ed. 2013 (1945), defendants argue that § 533(b) does not violate the First Amendment if § 533(b) is rationally related to a legitimate governmental interest. In National Citizens Commission, the Supreme Court held the First Amendment did not prohibit an F.C.C. rule preventing newspapers from owning broadcasting stations in the same community. 436 U.S. at 798, 98 S.Ct. at 2114. As the Supreme Court recently has made clear, National Citizens Commission and a related line of cases⁶ rest on the broadcast industry's electromagnetic spectrum being a scarce resource. In those broadcast cases, extensive regulation is justified in ensuring that a diversity of viewpoints can utilize the limited broadcast spectrum which is available. See Turner Broadcasting, ___ U.S. at ___-___, 114 S.Ct. at 2456-57.

The National Citizens Commission line of cases does not justify restrictions on speech in the cable television industry as the cable industry does not rely on the physically scarce electromagnetic spectrum to convey messages. Turner Broadcasting, ___ U.S. at ___, 114 S.Ct. at 2457. Therefore, the rational basis level of review endorsed by Red Lion Broadcasting, 395 U.S. at 386-95, 400-01, 89 S.Ct. at 1804-09, 1812, and the other broadcast cases is not appropriate in reviewing the constitutionality of § 533(b). See Turner Broadcasting, ___ U.S. at ___, 114 S.Ct. at 2457.

In Turner Broadcasting, the Supreme Court held that Associated Press does not allow Congress to restrict speech simply because the restriction rationally relates to a legitimate governmental interest. Turner Broadcasting, ___ U.S. ___, 114 S.Ct. at 2458. The Court wrote:

Associated Press ... involved actions against members of the press brought under the Sherman AntiTrust Act, a law of general application. But while the enforcement of a generally applicable law may or may not be subject to heightened scrutiny under the First Amendment, ... laws that single out the press or certain elements thereof, for special treatment "pose a particular danger of abuse by the State," ... and so are always subject to at least some degree of heightened First Amendment scrutiny.

Id. (citations omitted). Section 533(b) singles out telephone companies and their affiliates for special treatment: only those companies are subject to the restrictions set forth in that law. Therefore, to comply with the First Amendment, the restriction on speech in § 533(b) must do more than rationally relate to a legitimate governmental interest. As a result, the degree of scrutiny to be utilized by this court in its analysis is either strict, under Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221, 231, 107 S.Ct. 1722, 1729, 95 L.Ed.2d 209 (1987), or intermediate, under United States v. O'Brien, 391 U.S. 367, 377, 88 S.Ct. 1673, 1679, 20 L.Ed.2d 672 (1968).

Plaintiffs first argue that § 533(b) amounts to a content-based restriction on speech and, as such, mandates strict scrutiny. A content-based restriction on speech violates the First Amendment unless the restriction is necessary to vindicate a compelling governmental interest and is narrowly drawn to achieve that purpose. Arkansas Writers' Project, 481 U.S. at 231, 107 S.Ct. at 1729. Defendants emphasize that the purposes behind § 533(b) do not include a desire to suppress ideas or viewpoints. Thus, defendants argue, strict scrutiny does not apply to § 533(b).

In a similar challenge to § 533(b) by another telephone utility, the court in Chesapeake & Potomac Tel. Co. v. United States, 830 F.Supp. 909 (E.D.Va.1993), stated that a strict scrutiny analysis was inappropriate.⁷ In Chesapeake & Potomac, as in this case, the government argued that § 533(b) served to promote a diversity of ownership in the media and to prevent telephone companies from engaging in anti-competitive conduct. 830 F.Supp. at 924. The Chesapeake & Potomac court emphasized that the asserted justifications for § 533(b) were content-neutral, that is, the justifications were not related to suppressing particular ideas or viewpoints. Id. at 926. Relying on City of Renton v. Playtime Theatres, Inc., 475 U.S. 41, 106 S.Ct. 925, 89 L.Ed.2d 29 (1986), the district court reasoned that § 533(b) should not be subjected to strict scrutiny, in light of the content-neutral purpose of the statute. 830 F.Supp. at 924. This court substantially agrees with the analysis of Renton in Chesapeake & Potomac and finds that Renton precludes the application of strict scrutiny to § 533(b).⁸

The court finds, however, that the heightened or intermediate scrutiny described in O'Brien should apply to § 533(b). Under O'Brien, content-neutral regulation of speech survives scrutiny only if:

it furthers an

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