Bellsouth Telecommunications v. Town of Palm Beach

• Decision Date: 25 May 2001
• Docket Number: Nos. 99-14272,99-14292,s. 99-14272
• Citation: 252 F.3d 1169
• Parties: (11th Cir. 2001) BELLSOUTH TELECOMMUNICATIONS, INC., Plaintiff-Counter-Defendant-Appellee-Cross-Appellant, v. TOWN OF PALM BEACH, a Florida municipal corporation, Defendant-Counter-Claimant-Appellant-Cross-Appellee. BELLSOUTH TELECOMMUNICATIONS, INC., Plaintiff-Counter-Defendant-Appellee-Cross-Appellant, v. CORAL SPRINGS, CITY OF, Defendant-Counter-Claimant-Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1169

252 F.3d 1169 (11th Cir. 2001)

BELLSOUTH TELECOMMUNICATIONS, INC., Plaintiff-Counter-Defendant-Appellee-Cross-Appellant, v. TOWN OF PALM BEACH, a Florida municipal corporation, Defendant-Counter-Claimant-Appellant-Cross-Appellee.

BELLSOUTH TELECOMMUNICATIONS, INC., Plaintiff-Counter-Defendant-Appellee-Cross-Appellant, v. CORAL SPRINGS, CITY OF, Defendant-Counter-Claimant-Appellant-Cross-Appellee.

Nos. 99-14272, 99-14292.

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT.

May 25, 2001.

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Appeals from the United States District Court for the Southern District of Florida. D. C. Docket No. 98-08232-CV-WPD and 97-07010-CV-WPD

Before BIRCH and BLACK, Circuit Judges, and NESBITT^*, District Judge.^**

BIRCH, Circuit Judge:

This appeal requires us, as a matter of first impression in this circuit, to answer two questions pertaining to § 253 of the Telecommunications Act of 1996: (1) what is the preemptive scope of § 253; and (2) who may seek enforcement of the provisions of § 253? Because we disagree with the district court's interpretation and application of § 253, and also, in part, because amendments were made to relevant state laws after the district court rendered judgment, we AFFIRM the district court's judgment in part, REVERSE in part, and REMAND to the district court for further proceedings.

I. BACKGROUND

In the preamble to the Telecommunications Act of 1996¹ ("the Act"), Congress announced that it was passing "[a]n Act to promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies." 110 Stat. at 56. The provisions of the Act were intended to supplement and amend the statutory framework established in the Communications Act of 1934, 47 U.S.C. § 151, et seq., and the end result has been described as a "fundamental[ ] restructur[ing of the] local telephone markets." AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 371, 119 S.Ct. 721, 726 (1999). The City of Coral Springs and the Town of Palm Beach (collectively, "the Cities") perceived that the Act mandated changes in the way they regulated telecommunications services providers; in response, Coral Springs passed ordinance 97-114 and Palm Beach passed ordinance 16-97, both of which purported to restructure the Cities' franchising and licensing of telecommunications service providers' use of the public rights-of-way in accordance with the new federal law. The Cities' ordinances were similar in many respects, but they adopted different approaches to several significant issues.

BellSouth was the incumbent local telephone service provider in both of the Cities at the time the Act, and subsequently when the ordinances, were passed. BellSouth first brought suit in federal district court against Coral Springs, seeking a declaratory judgment that ordinance 97-114 was preempted both by Florida state law and by § 253 of the Act. Coral Springs filed a counterclaim for breach of contract in which it sought to enforce an ordinance passed in 1965 that gave it the option to purchase BellSouth's facilities. BellSouth moved for summary judgment on its preemption claims and on Coral Springs's counterclaim, and Coral Springs moved for summary judgment on BellSouth's preemption claim. The district court upheld some sections of the ordinance, but found that others were preempted by state or federal law, or both. The district court also granted BellSouth summary judgment on Coral Springs's counterclaim.

After filing suit against Coral Springs, but before that case was resolved, BellSouth filed a similar suit against Palm Beach, seeking a declaratory judgment that its ordinance 16-97 was preempted. Palm Beach filed a counterclaim seeking compensation under the terms of the ordinance. Both parties moved for summary judgment, and the district court, employing the same analysis it had utilized in its summary-judgment order in the Coral Springs case, upheld parts of the ordinance while striking down others on a mixture of federal and state preemption grounds. In its motion for summary judgment in this case, BellSouth had argued that if a substantial portion of the ordinance were preempted, the entire ordinance should fall. The district court, however, found that the preempted sections were severable, and allowed the non-preempted sections of the ordinance to stand. Because one of the sections of the ordinance that the district court struck down was that governing compensation for use of the rights-of-way, the district court sua sponte granted BellSouth summary judgment on Palm Beach's counterclaim.

The Cities appealed, challenging the district court's findings of preemption and dismissal of their counterclaims. BellSouth cross-appealed, claiming that the district court erred in upholding sections of the ordinances, or, in the alternative, that the preempted sections were not severable, and, therefore, the ordinances should have been struck down in their entirety.

II. DISCUSSION

"We apply the same legal standards in our preemption analysis that the district court was required to apply in its order granting summary judgment; therefore, we review the district court's decision de novo." Lewis v. Brunswick Corp., 107 F.3d 1494, 1498 (11th Cir. 1997). Because federal preemption of a state or local law is premised on the Supremacy Clause of the United States Constitution, see Bosarge v. United States Dep't of Educ., 5 F.3d 1414, 1419 (11th Cir. 1993), and because of the longstanding principle that federal courts should avoid reaching constitutional questions if there are other grounds upon which a case can be decided, Santamorena v. Ga. Military Coll., 147 F.3d 1337, 1343 (11th Cir. 1998), we first decide whether the ordinances are preempted by Florida state law before considering whether they are federally preempted by the Act. Further, because each City has included a severability clause in its ordinance stating it is the City's intention that the remainder of the ordinance remain in effect if part of the ordinance is invalidated, we must address each relevant section of each ordinance in turn, reserving judgment on the preemption of the ordinances as a whole until both state and federal preemption analyses have been completed.

A. Preemption by Florida State Law

Under Florida Statutes § 364.01(2), the Florida Public Service Commission ("FPSC") has jurisdiction over the regulation of telecommunications companies within the state. Local governments are preempted from regulating telecommunications companies except to the extent provided in § 337.401, which is the provision of state law that historically has governed municipalities' power to regulate and tax telecommunications companies' use of the public rights-of-way. Our analysis of § 337.401 in this case is complicated somewhat by the fact that the statute has been amended twice since these lawsuits were filed, and future amendments are scheduled. When these lawsuits were initiated in August 1997 and April 1998, the text of § 337.401 had stood unaltered since 1994. In May 1998, however, § 337.401 was substantially amended. See 1998 Fla. Laws ch. 98-147. The district court duly took the 1998 amendments to § 337.401 into account when deciding the state-law preemption question in its summary-judgment orders, which issued in January and September of 1999. After the district court had entered its final judgment in both cases, the Florida legislature amended § 337.401 again with the passage of the Communications Services Tax Simplification Law ("Simplification Law"), 2000 Fla. Laws ch. 00-260. In order to understand the changes envisioned in the Simplification Law, we must begin with an assessment of the law that predated it.

Under the version of § 337.401 as amended in 1998, it was clear that municipalities were prohibited from exercising their authority to manage the public rights-of-way in such a way as to exert regulatory control over matters that fell under the exclusive jurisdiction of the FPSC or the Federal Communications Commission ("FCC"). Fla. Stat. § 337.401(6) (Supp. 1998). Municipalities could, however, require telecommunications companies to pay fees of up to "one percent of the gross receipts on recurring local service revenues for services provided within the corporate limits of the municipality" as consideration for the right to occupy the public rights-of-way. Id. at § 337.401(3). Municipalities also had the power to enter into agreements with telecommunications companies requiring them to pay fees based on the number of miles of cable laid in the public rights-of-way, as well as certain other fees as compensation for the direct, physical use of the rights-of-way and the administrative costs of regulating the rights-of-way. Id. at § 337.401(4).

The impetus for the Simplification Law appears to have been, in large part, the need to bring Florida law into compliance with the Telecommunications Act of 1996. To this end, the Simplification Law mapped out a complicated schedule of amendments to the Florida Statutes, including "transitional" amendments to § 337.401, which took effect on 1 January 2001. 2000 Fla. Laws ch. 00-260, § 50; Fla. Stat. § 337.401 (Supp. 2001). The transitional version of § 337.401 severely curtails municipal authority over telecommunications companies by prohibiting municipalities from requiring telecommunications companies to enter into a "license, franchise, or other agreement" as a condition of using the public rights-of-way, id. at § 337.401(3)(a), and by requiring that any municipal regulations pertaining to telecommunications companies' use of the public rights-of-way "must be related to the placement or maintenance of facilities in such roads or rights-of-way,...